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(Alliance News) - Accrol Group Holdings PLC on Tuesday reported a narrowed interim loss as the company's costs fell following the completion of its turnaround plan.
In the six months to October 31, the toilet roll and kitchen roll producer saw its pretax loss narrow to GBP3.0 million from GBP9.0 million. Gross profit almost doubled to GBP12.8 million.
Accrol's interim revenue grew 13% year-on-year to GBP65.1 million from GBP57.6 million.
The company's gross margin improved to 19.7% in the period from 12.0% the year before.
Blackburn-based Accrol attributed the improved performance to its recently completed turnaround plan, which began in February 2018.
"The financial benefits of these changes are now flowing through to the bottom line at an accelerating rate and these first half results show the improving monthly run rate being achieved by the business. With the turnaround complete and a strong management team in place, the board is now focusing on further automation of the group's operations and strategic opportunities to diversify, scale and grow the business," the company explained.
Administration costs fell 10% year-on-year to GBP9.5 million from GBP10.6 million. Exceptional costs for financial 2020 are guided to be about GBP1.0 million, down sharply from GBP7.9 million in financial 2019.
Accrol's consumer revenue - which excludes discontinued Away From Home products - jumped 20% year-on-year - which is ahead of market growth of 8%. The company attributed this to its improved product mix. Accrol does not expect similar growth in the second half but does expects its margin to continue to improve.
Chair Dan Wright said: "Accrol has been completely transformed by the new leadership team and is now a very different organisation. I am proud to say that our talented and experienced people have proved that it is possible to make good returns from tissue conversion, which has historically been viewed as a low margin sector.
"Group margins are returning to pre-IPO levels, as more robust commercial management programmes and operational efficiencies offset substantially higher comparative input costs. What is particularly pleasing is seeing volume growth at over 20% during this transformational business period."
Accrol did not pay an interim dividend but said it intends to begin paying dividend again in the medium term, assuming its performance remains in line with board expectations.
Looking ahead, Accrol is confident of meeting market expectations in the second half.
The company noted, however, it is "mindful" of the challenges that can arise following major changes to a business.
"As part of this strategy, the management team has turned its focus in the short-term to increasing automation across the group's production lines. The planned improvements in automation are a cost-effective and efficient way to improve the quality and presentation of our product range, whilst facilitate more rapid growth and further reducing operating costs significantly," Accrol added.
Shares in Accrol were 7.9% higher in London on Tuesday at 34.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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