Pre-tax profits at advanced manufacturer James Cropper have plummeted by 43 per cent as increasing pulp costs continue to hamper its financial performance.

The Burneside-based manufacturer of advanced materials and paper products saw pre-tax profits fall from £4.5 million in 2018 to just £2.6m for the year ending March 30, 2019.

Operating profit was also down from £5.4m to £3.4m for the period, in what group chairman Mark Cropper described as another challenging year.

Revenues, however rose to £101.1m, up from £96.3m for the previous year – the first time they have exceeded the £100m mark in the group’s history, it said in a statement to the London Stock Exchange.

Its Technical Fibre Products (TFP) business was the star performer, with its operating profit growing by almost 20 per cent to £8.8m.

Rising pulp prices have taken a £6.5m chunk out of the group’s paper business in the last two years, it said, although revenue rose in the paper division by 4.6 per cent for the current year.

In a letter to shareholders, Mr Cropper said: “This has been another challenging year for the group.  

“As detailed in the finance director's review section of the annual report, the dominant headwind has continued to be pulp cost increases. 

“For the second year in succession these have outstripped market expectations, increasing cost pressures on our paper business by over £6.5m over two years. 

“It has been impossible to pass all of this on within the timeframes, resulting in a loss for Paper of £2m in the current period.”

Mr Cropper added that the group’s profits had also been weakened by operating losses in its James Cropper 3D Products (3DP) business “as we scale up our investment to meet anticipated demand for this new subsidiary”.

“Nevertheless, the strength of the group remains strong with record revenues, product mix improvements delivering good underlying performance, investment on the increase and sound EBITDA (earnings before interest, tax, depreciation and amortisation) levels providing clear headroom against our covenants,” he said.

“Exports edged upwards to 56.3 per cent in the current year, although this only tells part of the story: the growth of many of our UK customers has also been export driven, further shielding us from any potential Brexit related weakness in our domestic market.”

Mr Cropper also drew on other positive developments in the group, including a 50 per cent increase in capacity for 3DP and the fact that its non-plastic packaging product Colourform had seen major contracts go live since the end of the current period.

Construction has also started on a new machine house for TFP, which he described as “the most significant addition to our operations in 25 years”.

TFP develops and manufactures high performance nonwoven materials for the aerospace, medical, infrastructure, automotive and defence sectors, with a growing market share in the energy and fuel cells. 

It emerged as one of the big winners at the recent in-Cumbria Business Awards 2018, where it picked up the Best Manufacturing and Best Innovation awards.