James Cropper, the Cumbria-based specialist paper maker, pushed profits up strongly last year thanks to a strong recovery by its technical fibres division (TFP). For the year to 29 March, pre-tax profits powered ahead 22.3% to £1.9m and eps moved up 64.1% to 15.1p, all on continuing turnover of £55m (£54.4m). Chief executive Alun Lewis flagged up record operating profits up 98% to £600,000 at TFP, which together with an improved year in the paper division and falling interest hits, more than offset the downturn in the converting division's profits. Profits here almost halved on account of subdued volume for display board and contract converting, and falling margins on US picture mounting board sales hit by US dollar weakness. The paper division benefitted from comparatively lower pulp prices throughout most of the year, though in the final quarter prices rose rapidly. Cropper's strong positive cash flow continued, reducing gearing from 27% to 24%. Before the figures, Evolution Beeson Gregory was going for pre-tax profits of £1.8m for 2004, giving eps of 15.1p again. On these numbers, the shares trade on 12.6 times earnings. Though pulp prices are rising on the paper side, the weakening pound should put the group is a better position vis a vis its European rivals. A solidly managed venture, with good prospects. Buy.
Market cap: £16m
PE Forecast: 12.6
Share price: 190p
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