Tissues group well placed following strong annual performance

Accrol, the Blackburn-based AIM-listed tissue and toilet roll maker, said its annual results will, at least, be in line with forecasts.

In a trading update for the year to April 30, 2023, expected to be published in late September, it said it has performed strongly, gaining further market share through its product range, broad retailer base, and new routes to market.

The group has successfully navigated and mitigated the well-reported and substantial inflationary pressures on a broad range of input costs through further process efficiencies and by engaging constructively with its customers to pass-on these additional costs.

Adjusted EBITDA is expected to be at least in line with market expectations. Revenues are ahead of market expectations at £241.8m up 52%.

Adjusted net debt at April 30, 2023, was lower than last year at £26.8m (FY22: £27.5m).

Group volumes increased by 7.7%, compared with an overall flat tissue market with market share increasing to 21.5%, against 19.5% the previous year.

The gross margins continued to improve throughout the year with increased volumes in higher value products – the strong growth in the water industry-approved flushable wet wipe business is especially pleasing, Accrol said.

Looking ahead, the group said it is well positioned as it enters fiscal year 2024 with margins expected to improve back towards pre-pandemic levels at a faster rate than previously reported as Accrol benefits from the significant investments made over the past few years and the improving revenue mix.

Prices are expected to soften in the year ahead, while volumes are expected to grow ahead of the overall private label sector. With all major capital investments now completed, the group expects adjusted net debt to reduce to less than 1.0x in 2024.

And the business has a further 20% of production capacity to support continued volume growth going forward.

Its preparation for its investment in a paper mill is progressing and it remains on track for the mill to be operational and positively impacting the business in the second half of 2025. As previously announced, the funding of this investment will come from existing cash reserves.

Chief executive, Gareth Jenkins, said: “Accrol is significantly well invested and fully automated.

“With our enviable customer base, broadening revenue streams, spare capacity and excellent levels of customer service, the group is very well placed to take further advantage of the changing dynamics in consumer spending, which is particularly evident in the tissue market.

“We are pleased with the outcome for FY23 and look forward to the year ahead and beyond with increasing confidence.”