James Cropper produces the paper which is used to make the Royal British Legion’s poppies each year
(Picture: PA Archive)Paper product manufacturer James Cropper has halved its forecasts for this year’s profits on the back of soaring energy and materials costs.
The company said its energy bills had increased by 148% compared to last year while at the same time, the cost of raw materials had been subject to “unprecedented inflationary headwinds”, rising 20%.
Although it had sought to mitigate these increases by putting its prices up and introducing energy surcharges, it said profits for the 2022/23 year would be £2 million - less than half of the £5.4 million it had previously predicted.
Its energy-intensive paper division had been hit particularly hard, it said.
Shares in the business dropped more than 15% in Monday morning’s trading on the back of the profit warning.
Mark Cropper, chairman of James Cropper, said: “The uncertainty and unprecedented inflationary pressures... have forced us to revise our profit expectations, despite each division showing strong demand and growth in sales.”
Among other things, James Cropper manufactures the paper used to create millions of Remembrance poppies for the Royal British Legion each year.
It also produces packaging for high-end brands including Mulberry, Burberry and Selfridges.
In a trading update for the six months to 24 September, the company’s revenues were 26% higher compared to the same period last year, and it reported that demand had remained strong across its various divisions.
“Overall, despite the short term setback in profitability, growth prospects for the group as a whole remain significant in the coming years,” Cropper added.
