Cropper (J) Regulatory News (CRPR)

Embargoed until 11.00am

30th July 2014

James Cropper PLC ("James Cropper" or the "Company")

Annual General Meeting and Trading Update

At the Company's AGM held at 11.00am today, Mark Cropper, Chairman, made the following statement:

"I am pleased to report that the Group has traded profitably in the first quarter of the new financial year with Profit before Tax in line with management expectations and the comparable period last year".

"Implementation of our plans to restructure management in order to bring about greater customer and operational synergies is well advanced. Within the new James Cropper Paper Products division (incorporating Speciality Papers and Converting) the merged commercial teams are being re-organised to enable each regional sales leader to market the full range of the paper portfolio, aiding the acceleration of global sales. As regards manufacturing operations, until now, each business has operated separately and focused on its own activities. Consequently it has not been possible to take full advantage of the efficiencies available by co-ordinating operations across the Group. The manufacturing operations are now run as one group and the re-shaping of management responsibilities for manufacturing operations will be completed during the course of the current financial year."

"Some recent developments in Technical Fibre Products ("TFP"), Paper Products and our Technology & Innovation Directorate have been very encouraging."

"I am pleased to report that TFP's presence in the Aerospace market continues to grow. TFP and AGC AeroComposites have collaborated in the joint development of electrostatic and lightning compatible composite pipes suitable for use in aircraft fuel systems. The development is the first of its kind and presents the opportunity to save weight in aircraft fuel systems by replacing the heavier metallic equivalents currently used. It is estimated that a weight saving of up to 200 kg per aircraft could be achieved, potentially equating to an estimated fuel saving of up to 26,000 kg per aircraft per annum. This new development was launched at the Farnborough International Airshow earlier this month".

"Paper Products' new Chinese subsidiary has made a break through in the Chinese domestic market having secured the supply of packaging material for the Smartisan T1 hi-tech mobile phone. 5,500 people attended a three hour product launch event at the China National Conference Centre in Beijing in May during which Smartisan credited their network of reputable suppliers. This included specific mention of James Cropper and included video footage of last year's Royal visit to our Burneside facilities. The Smartisan T1 went on sale in China in early July". 

"As one of its early initiatives Technology & Innovation has been working in partnership with Södra, the Swedish forestry giant, to develop DuraPulp. This blend of carefully selected wood fibres and non-fossil based biopolymer can be heat pressed to take on any rigid form. Unlike other composite products, DuraPulp is believed to be the only one available where the primary content is renewable, biodegradable pulp fibre. Our agreement with Södra is exclusive to premium markets, aiming to further establish DuraPulp in sectors such as luxury fashion, cosmetics, automotive and interior design sectors in a broad, international campaign. Together we will be exploring new markets to establish how this unique product can provide a credible alternative to fossil-based materials."

"Export markets are very important to us, representing 50% of total turnover in the past financial year. It was very pleasing that across the Group sales into the USA were up 15%, offsetting the 2% decline in sales into continental Europe. It was inevitable that as we succeeded in growing sales outside of continental Europe our exposure to the US dollar would increase. We have already taken further measures in the current financial year to create a natural hedge by purchasing more of our raw materials in US dollars".

"The cost of Northern Bleached Softwood Kraft virgin wood-pulp started the year at US$920/tonne and had risen to US$927/tonne at 22nd July 2014. Some market analysts believe that the price of pulp has now peaked and will fall during the remainder of 2014. It is intended that the level of overall pulp substitution from material produced by our innovative Reclaimed Fibre plant will be in the region of 13% by the end of the current financial year."

"I am confident that TFP will grow strongly in the coming year with sales into Aerospace and Defence sectors leading the way. In Paper Products the focus will be on profitable volume growth and margin improvement. Our Technology & Innovation Directorate is actively exploring potentially exciting market opportunities".

"Re-structuring at Executive level is now complete and as a consequence a new strong team is in place. I am confident that it will deliver increasing profitability under Phil Wild's experienced leadership in the years to come".

Mark Cropper

Chairman