James Cropper Loses Merchant Customer, Revamps Operating Model
James Cropper: a "significant customer" will no longer source certain coloured paper ranges from the mill
James Cropper has introduced a new operating model at its Paper & Packaging division as the group strives to restore long-term profitability, while also adapting to the loss of a major customer for coloured papers – believed to be GF Smith.
In its full year results announced today for the year to 29 March, James Cropper posted sales down 3.6% at £99.3m.
Advanced Materials sales were up 3%, but Paper & Packaging sales declined by 7% due to a "change in product mix".
The pre-tax loss increased to £6.7m (FY24 loss: £5.3m).
Earlier this month James Cropper received notice from "a significant customer" that it would no longer source certain coloured paper ranges from the mill, with immediate effect.
"This decision followed a reduction of approximately 50% in sales of these products to that customer in the first quarter of the financial year," James Cropper stated.
James Cropper has been a long-term partner of specialist merchant GF Smith, making its Colorplan range. The two companies also partner on the Extract papers made from recycled coffee cups.
At the time of writing it wasn't clear whether GF Smith will still buy some products from the Cumbrian materials manufacturer in future, or not.
A spokesperson for GF Smith confirmed that manufacturing of Colorplan was moving. Industry sources have mooted a new partnership between GF Smith and Fedrigoni, but this has not been confirmed.
James Cropper aims to boost performance at its Paper & Packaging division with a new '3 Peaks' model focused on commodity papers, core products, and technical papers.
The group said these categories would provide the volume and flexibility needed to optimise asset utilisation, improve cost recovery, and support consistent service levels.
"There is ample opportunity to operate more effectively and efficiently in delivering these products, with reductions in fixed and operating costs, such as labour, energy, material utilisation and procurement, expected to contribute substantially to improvements in the Paper and Packaging business profitability.
"Over time, we will increasingly invest in Peak 3, technical papers, to develop higher-value, innovation-led products that more closely align to our Advanced Materials business. This will enable us to open new market opportunities and deliver differentiated solutions to customers seeking sustainable, fibre-based alternatives."
Regarding the loss of the merchant customer, which James Cropper did not name, the group said it would decrease expected asset utilisation in the near future.
"While unexpected and unwelcome, this does not change our strategy or intent and an assessment of optimal operational structures, which also considers our business growth pipeline and expected outcome from this, is currently being undertaken."
CEO David Stirling, who joined in February, commented: "This is a period of change for the Group, and after six months as CEO, I am encouraged by the progress we have made in laying the groundwork for future success. We have a clear strategic direction, a focused plan of execution, and a stronger foundation from which to build."
James Cropper's share price rose by 7.23% on the results and was at 252.00p at the time of writing (52-week high: 324.00p, low: 125.15p).