Kendall-based paper products and advanced materials firm James Cropper plc has published a trading update and overview of its strategy “to accelerate revenue and profit growth” that involves cutting 10% of jobs in its paper division.
James Cropper’s shares have fallen more than 50% in the past year to give the firm a current stock market value of about £57 million.
Cropper reported an” improved trading performance” in the second half of the financial year ended April 1, 2023.
The company said it expects to generate £130 million revenue for FY23 and an adjusted profit before tax of not less than £2.2 million, exceeding market expectations of £2 million.
The firm said it has made significant progress since 2022 “in repositioning James Cropper to capitalise on growth opportunities within its core and emerging end-markets.”
Cropper said: “The fast-growing renewable energy and decarbonisation markets are creating an ever-greater need for novel and high-performance materials, while sustainable fibres, and low, or zero, carbon processing are driving growth within paper and packaging.”
The company said that in order to position itself to accelerate growth, it is making three strategic changes –reorganisation and renaming its brand profile, making a “step change” of investment in innovation and systems, and streamlining its paper division to “improve productivity and margins.”
The group will invest in the James Cropper brand by reorganising itself from the three separate divisions of James Cropper Paper, Technical Fibre Products and Colourform into four segments all under the group name: James Cropper Creative Papers, James Cropper Luxury Packaging, James Cropper Technical Fibres and James Cropper Future Energy.
The segments will be managed under two managing directors covering paper products and advanced materials respectively.
On its “investment in innovation and systems” Cropper said: “The strategy will realise greater synergies across the group, supported by a multi-million pound investment in the next three years that will simplify processes and systems and combine group functions.
“In turn this will enable smarter access to data and inform leaner working practices allowing the group to operate more efficiently.
“To drive future growth through innovation, the board has made a senior level appointment with the move of Patrick Willink to the new position of Chief Innovation Officer, starting immediately.
“Patrick will lead a Centre for Innovation at James Cropper, bringing a wealth of experience to this role, as former Paper Operations Director, Group Chief Technology Officer, and most recently Managing Director of Colourform, the group’s award-winning luxury packaging division.”
On streamlining the paper division, Cropper said: “In order to create a more resilient and higher margin business that is less exposed to the multiple headwinds it has faced for many years, the group is proposing to reduce the number of paper machines in operation from four to three, with two machines anticipated to be in production at any one time.
“Together with the reorganisation and streamlining of group functions and related investment (as outlined above), this will lead to a change in overall headcount, and accordingly the company has today submitted an advance notification of redundancies, with a 90-day consultation period commencing with immediate effect.
“Overall, approximately 10% of employees will potentially be affected, predominantly within the paper and group functions at a cost of £2.1m, of which the majority will be cash.”
James Cropper CEO Steve Adams said: “After a year in which the company has faced unprecedented challenges, I am extremely grateful to the whole team for helping to exceed against our revised expectations.
“However, moving forward, we must continue to be mindful of future headwinds and drive margin improvement.
“We’re a purpose-driven business built on strong values and announcing potential job loses is not a decision taken lightly.
“We will work collaboratively with our employees, unions, and representatives throughout this process. Change is difficult yet it is essential to ensure the sustainability and growth of James Cropper.
“Our strategic realignment will drive margin improvements by bringing greater focus on our customers and allow us to take better advantage of our size and remain agile and dynamic in our markets.
“Combined with our wealth of manufacturing knowledge, sustainability alternatives and pioneering abilities we will strengthen our position across multiple sectors as the preferred global partner of choice.”