Paper and speciality fibres manufacturer James Cropper is investing $3m in a new manufacturing facility in New York State.
Cropper’s subsidiary Technical Fibre Products is consolidating all its US operations on one site and installing two fibre plating lines at the facility. The investment is nearly as much as Cropper invested in the whole group in 2010-11.
Cropper’s Cincinnati facility will close by mid-2012 but the other US site will stay open until the new facility gets accreditation for customer programmes. The new site should reach breakeven in 2015.
This new investment will lead to £500,000 of additional development costs.
The UK paper market remains tough and sales of the speciality papers and converting divisions will be significantly lower than previously expected.
Cropper says that its profit in the year to the end of March 2012 will be similar to last year’s figure before IAS19 pension adjustment. However, it is unclear whether it is the £3.4m on continuing operations or the £1.7m that includes losses on discontinued operations. As Arbuthnot had forecast a profit of £2.71m, depending on the basis of the forecast, it could be the latter. At the interim stage, Cropper reported a fall in profit from continuing activities from £1.74m to £1.13m.
An unchanged dividend of 7.9p a share would still be well covered.
Net debt was £6.2m on 1 October 2011 and this was already expected to rise in the second half.
At 161p a share, down 8p, Cropper is valued at £13.7m.
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