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UK’s Accrol FY 2023 Results: Revenues up 52 percent From Year Ago to £241.9 million
Accrol, the UK's leading independent tissue converter, announces its audited final results for the year ended 30 April 2023 ("FY 23" or the "Period"), which show strong growth in both revenue and profit, driven by increasing market share and volumes. Gareth Jenkins, CEO of Accrol, said: "The group has performed strongly in a challenging year, gaining further market share through its great value product range, broad retailer base, and new routes to market and is in an enviable position to take advantage of the changing dynamics in consumer spending, which are particularly evident in the tissue market. "Accrol is the lowest cost tissue convertor in the UK and is fully automated across all tissue sites, having completed all major converting strategic capital investments in the year. With the development and focus on market leading products, for softness in Toilet Tissue and absorbency for Kitchen Towel, we have generated significant volume and market share growth across all sectors of our business." "The cost-of-living crisis is continuing to drive consumer demand for great value products and the Group is confident of achieving further volume and profit growth in FY24, as it continues to build on its market leading position. Our focus on increasing volumes, business mix and efficiency has already delivered an improvement in margins back to pre-pandemic levels in the first few months of the new financial year. This margin recovery has been quicker than expected and we now expect FY24 EBITDA will be ahead of the Board's prior expectations. Market expectations as at 25 September 2023 for FY23 (Shore Capital & Zeus) and FY24 respectively - Revenue £241.8m EBITDA £15.5m and Revenue £230m EBITDA £19.5m. FY 23 highlights:
Chris Welsh succeeded Richard Newman as Chief Financial Officer, having joined the Group from INEOS Chemicals in October 2022. Current trading and outlook
The board views the future with increasing confidence, while remaining mindful of the continuing inflationary environment and other macro challenges. Dan Wright, executive chairman of Accrol, said: "The group has delivered a very strong set of results of which we are very proud. The management team successfully navigated and mitigated the well-reported and substantial inflationary pressures on a broad range of input costs, through further process efficiencies and by engaging constructively with our customers to pass-on these additional costs. "We have a strong, market leading position, with a clear focus on remaining the lowest cost producer of any scale. Our product mix is strengthening margins and cash generation is growing. We are, therefore, confident that our FY24 EBITDA will be ahead of initial Board expectations." Overview of Accrol Accrol Group Holdings plc is a leading tissue converter and supplier of toilet tissues, kitchen rolls, facial tissues, and wet wipes to many of the UK's leading discounters and grocery retailers across the UK. The Group now operates from six manufacturing sites, including four in Lancashire, which together supply c.21.5 percent (volume) of the UK tissue market valued at c£2.5bn at retail sales value. Chairman's Report The group has delivered a very strong set of results of which we are, once again, very proud. The management team successfully navigated and mitigated the well-reported and substantial inflationary pressures on a broad range of input costs through further process efficiencies and by engaging constructively with our customers to pass-on these additional costs. In the Period, the Group gained further market share, up a further 200bps to 21.5 percent, sales volumes grew by 7.7 percent and net debt declined to 1.7x EBITDA from 3.0x in FY22. The group continues to expand its product mix to higher value items with considerable growth across all key product types and, in particular, our toilet and kitchen towel brands, and private label products. Our wet wipes business, John Dale, has seen 169 percent growth in its water industry approved flushable wipes since it was acquired by the group in 2021. In January, the group announced the outcome of the strategic review, which laid out a clear set of medium-term objectives building on the strategic progress we have already made over the last four years. The objectives will see the Group take a market leading position in the UK Tissue market and the wider household and personal hygiene sector with specific higher added value products that provide a clear market difference. It is clear from the John Dale acquisition how the group can scale a high value business at pace, due to our exceptional access to all UK retailers and grocers. Our Vision From the outset, our vision has been to build a diversified group of size and scale, better positioned to manage input cost fluctuations, focused on a broader private label household and personal hygiene market. We believe the combination of capacity, efficiency and having the lowest cost base in the market is a compelling proposition. Strategic Review Our ambitions over the medium term are:
Further detail on the operational progress made against these ambitions is given in the CEO's report, but I am pleased to report that we have grown significantly in every product category in which we compete with toilet roll volume up 2 percent, kitchen towel up 20 percent, facial tissue up 53 percent, wet wipes volumes up 57 percent and our Oceans branded sales up 45 percent. Dividend & Share Buybacks Capital allocation is an intrinsic component of the Strategic Review, and the Board remains focused on determining the best use of the Group's free cashflow going forward, be it acquisitions, share buybacks, dividend payments, paying debt down further, capital investment and/or increasing raw material stocks. Effective capital allocation is about weighing risk and return. At this year's AGM the Board will seek the approval to buy back up to 10 percent of its ordinary shares. The Board believes that seeking the authority to purchase its own ordinary shares in the market is in the best interest of Shareholders for a number of reasons. As previously announced, the trading performance of the business has been strong and the Group has clearly demonstrated its ability to navigate a challenging inflationary environment whilst continuing to gain market share. Alongside the operational performance, the Group is now well positioned to benefit, from a free cash-flow perspective, from the completion of the three-year capital investment programme that has resulted in Accrol being the best invested tissue converter operating in the UK market. With the planned new paper mill fully funded and costed, the Board is confident in Accrol's ability to drive free cash-flow and thereby shareholder returns. By having the flexibility granted to pursue share buybacks, a fuller range of options to return genuinely surplus capital will now be available to the Board. Environmental, Social and Governance Since launching our maiden ESG report in September 2021, we continue to make good progress on the targets we set. We pride ourselves on ensuring that our ESG programme is integrated throughout the business and makes a valuable contribution to the Group, as well as helping us be better corporate citizens and minimising our impact on the environment. To this end, we have now integrated our ESG reporting throughout the annual report. We have seen step change improvements across all our key target areas. We were the first Living Wage tissue employer in the UK, we have 100 percent of our waste being recycled, we have reduced the number of vehicle movements by 5.5 percent despite growing volume by almost 8 percent, we have had a 15 percent reduction in our plastic packing usage and a 15 percent reduction in total waste produced. The Accrol Team is rightly very proud of these achievements. Our People Engaged, well trained people are a key element of our business model and sustainability goals, with training and wellbeing at the centre. I am proud to report that Accrol continues to be an accredited Living Wage employer. In addition, we have also paid each of our employees an additional £600 cost of living payment at the very start of the inflationary pressures seen for all in the UK. This has been especially important to our people, and it allows Accrol the advantage of being able to retain the best talent from the communities in which it operates. During the year, we appointed a Health, Safety and Environment Officer, who has joined to continue to drive the standards across this key area with a further reduction in all employee accidents of 10 percent in the year. The online training hub initiated in FY22 has now delivered over 4500 hours of training. Our employee engagement scores remain high with an overall score of 83 percent. I would like to thank all our people for their hard work and contribution during what has been a very challenging environment. The strong results delivered today and the further operational advances achieved in the year showcase the strength and capability of the management teams throughout the group, and would not have been achievable without the commitment and dedication of all our people. Outlook The cost-of-living crisis is continuing to drive consumer demand for great value products and the Group is confident of achieving further growth in FY24 as it continues to build on its market leading position. Our focus on improving volumes, business mix and our efficiency, has already delivered an improvement in margins back to pre-pandemic levels. This margin recovery has been quicker than expected and we now anticipate that FY24 EBITDA will be ahead of the Board's prior expectations. We do remain mindful of the continuing inflationary environment and other macro challenges. The team leading Accrol, however, has demonstrated its expertise and ability to manage the business through multiple challenges and the board views the future with increasing confidence. |
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