Cropper (james) Share Discussion Threads

[capercaillie] 03/8/2005 18:45

It looks as though it's going to be a long hard winter. Another jam tomorrow message. The news on the Shops was quite illuminating - turnover now around £5 million with a return of circa 10%. Four more shops due to open this year. The company appears to be at the mercy of factors beyond its control i.e. pulp prices, energy prices and currency fluctuations.

[acol] 03/8/2005 13:51

Glad that I chose to sell all of my holding shortly after the last results. Despite the high spread this share has been a good trade on the peaks and the troughs over the last few years.

[capercaillie] 03/8/2005 07:34

AGM today - hopefully some good news.

[capercaillie] 22/7/2005 16:02

Where is this share price heading? Hopefully there will be some further clarity on current trading with the AGM statement.

[capercaillie] 21/7/2005 09:32

Interesting development from a competitor of Crpr


Garnett's UK mill is unsustainable
July 21 2005

Garnett is to cease papermaking production in the UK, with 134 jobs at risk at its Otley mill.

The papermaking firm is currently in a 30-day consultation with employees, and while managing director Cliff Barry said the company would retain its converting and finishing processes, production will transfer to its global sites situated in East Africa and India.

Barry said one of the main reasons for the decision was a 700% increase in water rates by Yorkshire Water, which would take its bill to over £1m per year.

This coupled with rising costs for raw materials, energy and environmental improvements meant the mill was not sustainable.
"All these costs add up and the market cannot sustain any price increases we could apply."

He said the current cost of production in the UK was too high, and although it was inevitable that there would be redundancies, Barry said no decision had been made on final numbers.

Demand from Europe had also suffered from a severe downturn, and Barry said the firm had also failed to see any benefit from the recent Finnish mill disputes that curtailed production for seven weeks.

The firm has made significant investment in its coating facilities and earlier this year installed a new gift wrapping machine, and Barry said the firm would still continue to develop new products in that range.

Although production would transfer outside the UK, he said quality would remain the same for its products, which include digital papers, packaging materials, coated papers and board, and corrugated products. Garnett's product ranges include Alchemy, Filemaster, Ecoline and Supra.

[garth] 12/7/2005 14:00

Composites New Rapid Molding Technologies and Unusual Reinforcements at Paris JEC Show

Basalt fiber breaks out
The first commercial thermoplastic composite parts containing basalt fiber were shown at JEC this year, after prototypes appeared at previous shows. Structil, a unit of Group SNPE in Vert-le-Petit, France, showed a camera tripod made for Gitzo SA in France. Instead of aluminum legs, the tripod uses lightweight pultruded thermoplastic with 55% by volume basalt fiber. Basalt fiber is said to be stronger than E-glass fiber and less expensive than carbon fiber.

Basaltex in Belgium exhibited a commercial snowboard, molded by Mervin Manufacturing in Seattle, Wash., for Quiksilver Inc. Unidirectional basalt fiber tissue is laminated to both sides of a lightweight wood core.

The newest products made with Ba­saltex fibers are gossamer nonwoven veils that are in development by several suppliers. The first commercial products are made by Technical Fibre Products Ltd. of the U.K. (U.S. office in N.Y.). Trials of these paper-smooth veils is under way in laminated and thermoformed car headliners and door components.

[garth] 24/6/2005 09:54

Thanks C.

Interesting piece.

G.

[capercaillie] 24/6/2005 09:07

This article is from the Wetsmorland Gazette. Gives a few snippets of new infromation - shops account for 100 staff, there are plans for 5 new shops in 2007, gas prices will "badly hit" profitability but there is a few pipeline due from Norway in 2006. -----------------------------------------------------------

Papermaker sess profits double
One of South Lakeland's largest manufacturers has stacked up bumper profits on the back of a highly successful sales drive.

James Cropper plc more than doubled its pre-tax profits to nearly £1.8 million for the year to April 2005, compared with around £800,000 in the previous year.

The specialist papermaker saw its group turnover increase by 11 per cent, from £58m to £64.6m, and the company's performance would have been even better, but for a weakening dollar eating into profits from the US market.

Staff at the company, which employs 500 people at its Burneside mill plus a further 100 at its nationwide chain of Paper Mill shops, will share in Cropper's success. They will get a pay-out based on the company's profitability, safety performance and individual staff attendance records.

However, the firm has sounded a note of caution about prospects for the coming year by warning that rising fuel costs are likely to eat into profits.

The company's energy bill including gas, oil and electricity - rose by 28 per cent, to nearly £2.7m last year, and costs are expected to rise still further in the coming months.

Finance director John Denman told Business Gazette that gas prices were currently above the norm and another rise was likely in the autumn and winter. "We have to conclude that the profitability of our speciality papers will be badly hit by that.

"There is a new gas pipeline opening in 2006 from Norway that should see more gas coming into the UK that will ease the problem."

Commenting on the company's performance, chairman James Cropper said sales of speciality papers rose by 11 per cent, with packaging, business and industrial paper sectors all growing, particularly in the UK, US and China.

The Paper Mill shops business continued to flourish, with seven new outlets opening across the country, taking the total number of stores to 18. Since the financial year end, another shop has opened in Mansfield and plans are in the pipeline to open five more by 2007.

Cropper's converting division maintained its position as the leading UK manufacturer of advertising display board, but competition in domestic markets hit profit margins.

The development of digital imaging products saw the launch of a full range of papers and boards during the second half of the year, available to both the trade and general public, the latter through a dedicated website (www.paper milldirect.com) .

Another good year for the firm's technical fibre products division saw sales soar by 33 per cent in the US, a major part of its market.

TFP's metal-coated carbon fibre materials, used in electronic, medical and flexible heating devices, were most in demand, especially in the US.

With TFP and Johnson Mathey - its partner in a venture to develop fuel cell technology - gaining government funding, the company has commissioned a new research and development facility to support new product and market development.

Assessing the future outlook, Mr Cropper commented: "In recent years, the group has had to absorb increases in overheads that were largely outside its control. These have included increases in energy, pension contributions, National Insurance contributions, insurance premiums, effluent treatment charges and the cost of regulatory compliance.

"The growth in group turnover is therefore very encouraging and reflects our efforts to develop new products, markets and new routes to markets.

"TFP's sales in the US market continue to grow and early indications suggest that our plans to grow sales in James Cropper Speciality Papers are being achieved."

He added: "Given the group's sound financial position and its portfolio of related niche businesses, I am confident that despite the short-term challenges, we can develop and exploit future opportunities in our areas of expertise at home and abroad."

[capercaillie] 23/6/2005 17:17

Another little encouraging nudge northwards today - probably upon consideration of the results. Very disappointing that coverage in the press was nil - they must try for higher exposure, admittedly with their capitalisation they are at the bottom of the pecking order.

[capercaillie] 22/6/2005 11:46

Evolution Securities forecast for 2006 - Turnover £66m, EPS 16.9 and div 7.8. Seems quite optimistic given the company outlook in yesterday's report.

[garth] 21/6/2005 23:19

Useful update on the T1ps site - there was an interview, but seems to have been pulled. TW says is very positive long term esp. on FCT. Makes them a strong hold but says: " it can be buffeted by external factors beyond its control and this year that will be gas and pulp prices. Consequently I cannot foresee full year profits this time topping £1 million which equates to earnings of around 9.5p"

G.

[capercaillie] 21/6/2005 20:58

I make that a 3.8% yield with a PE of 9.9

[cockneyrebel] 21/6/2005 19:10

Well I have to admit to jumping out at the open as I could see the reaction coming. An over reaction I reckon but you have to go with the flow.

A point missed is that the $ has been rising so the bad news re the $ falling last year should be reversed in H1 at least.

Anyway, still a very cheap asset play I'd say, but asset plays can take some time to see true value.

might revist when the chart suggests it.

CR

[capercaillie] 21/6/2005 14:51

Yes, quite right. I would like to see the Shops split away from Paper in order to give greater clarity of this division. It will be interesting if Cropper receive any exposure in the press tomorrow. It does stand a chance as there are few larger companies reporting today.

[garth] 21/6/2005 13:05

Capercaillie,

I wouldn't disagree with any of that and will not be at all surprised to receive a positive update at some point. However, the main driver of growth was the Specialist Paper division - which I believe includes the revenue from the Mill Shops:
"The Division's operating profit increased from #415,000 to #1,663,000 over the
year."

The other divisions contributed around £0.75M

The Outlook statement is that:
"These factors are likely to depress profitability of James Cropper
Speciality Papers in the current financial year to below the levels achieved in
the past year."

That seems to be even after allowing for the further expansion of the Mill Shops mentioned in the same section.

Where over 65% of profits are coming from Specialty Paper I just think that that will serve to dampen the share price in the short term and that there will be opportunities for the long-termers to buy the dip. I'm hoping that the end of October will bring a positive update and will be watching the share price with interest through September....

I don't wish to detract from what has been an excellent year's performance. Medium/long term I remain very bullish and anticipate my holding being larger by the end of the year than it was this morning.

Kind regards,

G.

[capercaillie] 21/6/2005 11:50

I am not unduly worried about the Outlook. This company have historically been overly conservative about prospects. They report that rising energy costs are "likely to depress profitability of Speciality Papers to below the levels achieved in the past year". This does not guarantee that they will be substantially lower. Also it must be remembered that Cropper is not a one trick pony and also have Converting, TFP and the shops that could make a signifcant contribution to profits should exchange rates etc blow in the right direction. Coverting was able to make in excess of £1 million profit in 2002.

[garth] 21/6/2005 09:40

Capercaillie,

Agree that results themselves are very encouraging in so far as they report on the year gone. Growing revenue and improving profitability. I believe that you are right that there is good long term value here.

But with forecasts upgraded the expectation was for a continuation of that trend. We hear this morning that profitability will actually be lower next year.

They made 13.8p this year. I was hopeful for 16p+ next year and with that growth a possible rating of 20X = 320p+

As it is we are told lower profits next year which makes a 20X rating unrealistic. Even at 15X this year we are looking at 210p. Will the market support 15X through a long lazy summer? What will the brokers forecast for next year?

On that basis I sold some of my holding at around 220p this morning in the expectation that we will drift down to the 180p-200p region again.

I will look to add again at some point and don't rule out the possibility of another upward profit update.

IMO only. Good bounce.

G.

[capercaillie] 21/6/2005 08:09

Poor initial response from the market - report warns of difficult time for speciality paper but for long term holders I believe there is much to be encouraged about.

[hybrasil] 21/6/2005 07:46

Agred capercaillie. The fuel cell is beginning to look a little interesting.
The favt that US sales are up 33% is vey encouraging.

[capercaillie] 21/6/2005 07:43

Very pleasing results - good increase in dividend. The real breakthrough is the increase in turnover - finally growing the business after years of stagnation.

[hybrasil] 19/6/2005 11:07

tuesday looms - it could be quite a day.

[capercaillie] 16/6/2005 19:24

Yes a promising little rise. The stock is tightly held - so IF the the results are encouraging there could be quite a hike. It would be nice to see some director's purchasing, they have shown very little commitment collectively.

[garth] 16/6/2005 12:29

CR,

Certainly creeping up again. As I think we both agree: there is considerable value here for the patient. Mine are tucked away in the ISA.

There is plenty here to keep things interesting but the bit I thought I'd be least interested in seems to be a possible goldmine. I can't help but find myself recalling Ottakar's about 3 years back. As they got their outlets back on track profitability soared and so did the share price. Can Cropper do likewise? The Outlets are boosting revenue, and as Evos highlight (yes - I'm going to quote it again!):

"Cropper has 37% gross margins and high fixed costs. Depreciation is £3.2m per year and unlikely to rise much. This means a 7% sales rise in March 06 generates a 25% risen in operating profits and a 37% rise in EPS. We see this relationship continuing for some time."

Kind regards,

G.