Since full year results to 31 March 2018 the strength of the pulp price has continued and it remains above levels forecast by the Group's external specialist and we now expect these higher price levels to continue for the foreseeable future. In this difficult environment, the focus of the James Cropper Paper Division (“Paper”) is on improving sales mix whilst seeking to recover margin through calibrated price increases. Nevertheless, the sustained current high pulp price will have a material impact on the division's and the Group's results for the current financial year.
Technical Fibre Products Division (“TFP”) is continuing to demonstrate strong and steady sales and profit growth in the key markets such as aerospace, defence and fuel cells, with results in line with management's expectations. TFP's current projections indicate the Division will be close to existing capacity limits in the coming years. Accordingly, the decision has been made to expand capacity by a further 50 per cent to be available from around the start of 2021. James Cropper 3DP, trading as “Colourform”, is fulfilling a number of commercial contracts and enjoys a growing pipeline. The division is delivering on sales growth, generating revenue, and will provide profits for the Group as it scales.
The net impact of the higher pulp price on the Group's pre-tax profits for the current year is now expected to be a further £2.0 million and as a matter of prudence the Board is factoring the effect of the current higher price into its expectations for future periods.
The Board takes into account the strong prospects for TFP and Colourform against the difficult pulp price environment for the paper business and remains very confident in the strategy and subsequent growth for all divisions across the Group. The Company expects to announce its half year results to 29 September 2018 in the week commencing 12 November 2018.
Mark Cropper, Chairman, commented:
“The persistently higher pulp prices is impacting the returns from our paper business. Against this the success of TFP and 3DP reflects the continuing efforts of the Board to grow advanced technology businesses with reduced exposure to the uncertainties of commodity prices.”