No matter how tough the economy gets, people will still have to buy toilet roll. During the year to April, tissue manufacturer Accrol (ACRL) opened a new production facility in Lancashire that management expects to generate revenue of more than £100m, and reorganised its logistics operations to create a single warehouse. Its efforts so far appear to be paying off as it continues to increase its market share in the discount sector from 35 per cent to over 50 per cent during the period.
But shares fell 5 per cent in early trading after management warned of the inflationary impact that weak sterling would have on input costs across most product categories in UK retail. Gross margin fell from 29.2 per cent to 27.9 per cent over the period, but the worst of the impact was offset by currency hedging and favourable parent reel pricing. Accrol does not have a paper mill, instead opting to buy 'parent' rolls, which are large portions of unprocessed tissue paper, which the company then turns into specific products. Chief executive Steve Crossley said that there is currently a global oversupply of parent rolls, which gives the company good pricing power.
Analysts at Zeus Capital expect pre-tax profits of £14.9m in the year to April 2018 giving an EPS of 12.8p, compared to £13.5m and 12.4p in FY2017.
| ACCROL (ACRL) | ||||
| ORD PRICE: | 150p | MARKET VALUE: | £139m | |
| TOUCH: | 147-152p | 12-MONTH HIGH: | 165p | LOW: 106p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | NA | |
| NET ASSET VALUE: | 54p** | NET DEBT: | 38% | |
| Year to 30 April | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013* | 74.8 | 8.01 | na | na |
| 2014* | 87.7 | 7.06 | na | na |
| 2015* | 101 | 2.29 | na | na |
| 2016 | 118 | 6.98 | na | nil |
| 2017 | 135 | 9.40 | 0.1 | 6.0 |
| % change | +14 | +35 | - | - |
| Ex-div: | 21 Sep | |||
| Payment: | 11 Oct | |||
| *Pre-IPO figures **Includes £29.7m of intangible assets or 32p per share | ||||
