Cumbria-based papermaker James Cropper has warned that a sharp rise in pulp prices is likely to hit full-year profits.
In the Burneside-headquartered company's half-year results on 14 November 2017, it reported that the group's full-year results were expected be in line with board expectations notwithstanding a £2m adverse headwind due to a significant increase in pulp price impacting the Paper division.
Since this announcement, however, James Cropper told investors that the price of pulp has continued to rise beyond levels forecast by the group's external specialists. The full-year impact of the higher pulp price on the group's pre-tax profits is now expected to be approximately £3.5m, with a net impact of £1.5m.
Accordingly, the board expects pre-tax profits for the year to 31 March 2018 will be in the region of £5.7m.
The company expects the pulp price to reduce to "more normal levels" over the next 12 months although its Paper division is "accelerating investigations into alternative strategies that should minimise the effects of such commodity price increases in future years".
The board added that it remains very confident in the strategy and subsequent growth for all divisions across the group.