Cropper (J) Regulatory News (CRPR)

3 Aug 2005 13:01

Cropper(James) PLC03 August 2005 Issued by Citigate Dewe Rogerson Ltd, BirminghamWednesday, 3 August 2005 IMMEDIATE RELEASE James Cropper PLC Annual General Meeting At today's (3 August 2005) Annual General Meeting, James Cropper, Chairman toldshareholders: "The Group has experienced a challenging start to our current financial year andalthough turnover has been broadly in line with the first quarter of last year,this is against a backdrop of significant cost increases and subdued businessconfidence. In my Preliminary Results statement issued on 21 June I drew attention to theadverse impact that the rising cost of energy would have on profitability in thecurrent financial year. During the course of the previous financial year energycosts increased by 28% to £2.7 million. Energy costs in the first quarter of thecurrent financial year were 40% higher than the comparable period last year. The escalating cost of energy primarily affects James Cropper Speciality Papers.Given the uncertainties and fluctuations in the forward energy markets, it isextremely difficult to estimate the full year effect of rising energy costs atthis early stage in the financial year. Although Speciality Papers tradedprofitably in the opening quarter, it is inevitable that it will move into aloss making position later in the year should currently quoted winter energycosts materialise. Despite the competitive nature of the market place,discussions have already begun with customers to find those areas where priceincreases are achievable in order to mitigate the impact of these rising costs. Northern Bleached Softwood Kraft pulp, the market benchmark, opened the year atUS$645 per tonne falling to US$600 by the end of June, whilst the cost ofhardwood pulp increased from €450 per tonne to €490 over the first quarter.Latest market indications suggest that the cost of softwood and hardwood pulpwill remain close to current levels for the balance of the year. If this were tobe the case, then combined with the recent strengthening of both the US$ andEuro, the cost of pulp in the current year would be some 5% higher than lastyear. Recent exchange rate trends have aided Technical Fibre Products and JamesCropper Converting, both of which have significant turnover in US$s. Despite the current slow down in consumer spending across the retail sector, ThePaper Mill Shop will continue to expand the number of its outlets over thecourse of the year to take advantage of market opportunities and growing sales. In response to the difficult trading circumstances the Group will focus itsefforts on consolidating the sales gains of the previous financial year, whiledeveloping and implementing plans to improve profitability through operationalefficiencies and business optimisation. While I am confident that the steps to reverse the current decline in theGroup's profitability will be effective in the near term, the full effect ofthese measures will not be felt in this financial year. There is therefore apossibility that the difficulties we face in Speciality Papers may cause theGroup as a whole to make a loss before taxation in the current financial year." All Resolutions relating to both the ordinary business and special business wereduly passed. Enquiries: Alun Lewis, Chief ExecutiveJohn Denman, Group Finance Director Katie Dale, Senior Account ManagerJames Cropper PLC Citigate Dewe RogersonTel: 01539 722002 Mobile: 07770 788 624 This information is provided by RNS The company news service from the London Stock Exchange