Accrol Group Holdings (LON:ACRL) have reported a narrowed interim loss in an update to shareholders on Tuesday.
This comes as part of the company’s turnaround plan and restructuring, which seems to have become a success.
In the six months to October 31, the toilet roll and kitchen roll producer saw its pretax loss narrow to £3.0 million from £9.0 million. Gross profit almost doubled to £12.8 million.
Accrol’s interim revenue grew 13% year-on-year to £65.1 million from £57.6 million.
Additionally, shareholders will be pleased that the company’s gross margin rose to 19.7% from the 12% a year before.
Blackburn-based Accrol attributed the improved performance to its recently completed turnaround plan, which began in February 2018.
The firm also lowered its admin costs by 10% to £9.5 million from the previous £10.6 million figure.
Exceptional costs for financial 2020 are expected to be about £1.0 million, down sharply from £7.9 million in financial 2019.
Customer revenue rose 20% year on year, which was miles ahead of market growth at 8% which will certainly stake shareholder appetite.
The company attributed this to its improved product mix. Accrol does not expect similar growth in the second half but does expects its margin to continue to improve.
Acrrol has not paid a dividend to its shareholders, but expects this to occur in the media term as long as performance remains steady and growth occurs.
The firm ended the update by saying that the firm is confident off of meeting market expectations in the second half. The company noted, however, it is “mindful” of the challenges that can arise following major changes to a business.
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“The financial benefits of these changes are now flowing through to the bottom line at an accelerating rate and these first half results show the improving monthly run rate being achieved by the business. With the turnaround complete and a strong management team in place, the board is now focusing on further automation of the group’s operations and strategic opportunities to diversify, scale and grow the business,” the company explained.
Chair Dan Wright said: “Accrol has been completely transformed by the new leadership team and is now a very different organisation. I am proud to say that our talented and experienced people have proved that it is possible to make good returns from tissue conversion, which has historically been viewed as a low margin sector.
“Group margins are returning to pre-IPO levels, as more robust commercial management programmes and operational efficiencies offset substantially higher comparative input costs. What is particularly pleasing is seeing volume growth at over 20% during this transformational business period.”
Accrol shares jumped 5.08% to 33p. 7/1/20 12:44BST.
