James Cropper returns to profit as debt falls and turnaround gains traction

A much healthier set of numbers

James Cropper's full-year results show a business making credible progress after a difficult FY25.

Revenue for the year ended 28 March 2026 increased by 3.6% to £102.9 million, but the more important movement came further down the income statement. Adjusted EBITDA rose by 33% to £8.9 million, while statutory profit before tax reached £3.9 million compared with a £6.7 million loss last year.

Adjusted EBITDA means earnings before interest, tax, depreciation and amortisation, excluding pension accounting adjustments and exceptional items. It is management's preferred measure of underlying operating performance.

The balance sheet also improved, with net debt falling by £4.8 million to £8.1 million. That brought net debt down to 0.9 times adjusted EBITDA from 1.9 times a year earlier.

Key figure	FY26	FY25	Change
Revenue	£102.9 million	£99.3 million	3.6%
Adjusted EBITDA	£8.9 million	£6.7 million	33.0%
Adjusted profit before tax	£4.7 million	£1.3 million	£3.4 million
Statutory profit or loss before tax	£3.9 million	£(6.7) million	£10.6 million
Basic earnings or loss per share	30.8p	(55.9)p	86.7p
Net debt	£8.1 million	£12.9 million	£(4.8) million

The results were ahead of the Board's expectations, providing some evidence that the revised strategy is translating into financial improvement rather than remaining a collection of targets.

Advanced Materials remains the earnings engine

Advanced Materials delivered record revenue of £39.8 million, up 11.5% from £35.7 million. Adjusted EBITDA increased to £11.4 million from £10.6 million, while adjusted operating profit reached £9.6 million.

Growth was supported by Hydrogen Coatings, with revenues from nascent markets increasing by 22%. James Cropper uses "nascent" to describe earlier-stage markets offering attractive potential but also greater volatility and less predictable demand.

That distinction matters. Hydrogen, fuel cells, electrolysis and battery technologies may offer growth, but performance can depend heavily on individual customers and emerging technologies.

Around 60% of Advanced Materials revenue came from its five largest customers. One Hydrogen Coatings customer represented 17% of divisional revenue and 7% of Group revenue during FY26. That creates meaningful customer concentration risk.

Management also warned that only a limited number of development opportunities are expected to generate meaningful revenue over the next 12 months. The pipeline appears healthier over the medium to long term, particularly in markets such as aerospace and defence, but qualification periods can be lengthy.

This explains the cautious FY27 guidance. Advanced Materials revenue is expected to decline in the short term, mainly because Hydrogen Coatings had such a strong FY26. Management nevertheless continues to target underlying double-digit divisional revenue growth over the medium term.

The launch of UNIMAT, an aligned nonwoven fibre mat designed to enable recycled fibres to be used in high-performing composites, adds another potential avenue for growth. No expected revenue contribution was disclosed, so investors should treat it as a product opportunity rather than an immediate earnings driver.

Paper & Packaging is improving, but not fixed yet

Paper & Packaging revenue slipped by 0.9% to £63.1 million. Given the loss of a significant merchant customer, this was a resilient outcome.

The customer loss reduced revenue during the year by nearly £10 million. Management estimated the net revenue loss from the subsequent channel switch at around £6 million, with some comparative pressure continuing into the first quarter of FY27.

Replacement business and growth in graphics, packaging, core and commodity markets helped offset much of the damage. The launch of the Coloursource premium paper range with Winter & Company also maintained access to coloured paper products, although volumes increased slowly during the latter part of FY26.

The division remained loss-making across the full year, reporting an adjusted EBITDA loss of £0.5 million and an adjusted operating loss of £1.3 million. Both were substantial improvements on FY25 losses of £2.1 million and £4.1 million respectively.

Crucially, Paper & Packaging returned to EBITDA profitability in the second half. This followed restructuring, tighter raw material use, energy efficiency measures and a move to a five-day manufacturing shift pattern.

Approximately 70 roles were made redundant, split broadly equally between direct labour and support functions. Restructuring costs totalled £1.2 million.

The second-half improvement is encouraging, but one profitable half does not yet establish sustained profitability. The next test is whether stronger order books and cost savings can keep the division profitable while management works to improve asset utilisation and product mix.

Cash generation and debt reduction strengthen the story

Net cash generated from operating activities was £7.5 million, broadly stable year on year despite higher adjusted EBITDA. Operating cash flow represented 85% of adjusted EBITDA, down from 110% in FY25, partly because working capital and carbon allowances absorbed cash.

Debt reduction was supported by trading cash generation, restrained capital expenditure, tax recoveries and the disposal of non-core intellectual property. Capital expenditure was just £0.8 million, so investors should note that some of the cash improvement came from keeping investment low.

After the year-end, James Cropper entered a receivables finance agreement offering availability of up to £15 million, subject to eligible customer debts. It then made a one-off £7.1 million repayment on its UK bank loan, reducing the outstanding balance to £5.9 million.

The refinancing improves liquidity and flexibility, although invoice discounting is still a form of borrowing secured against receivables rather than additional operating profit.

No dividend as financial discipline continues

The Board will not recommend a final dividend, leaving the total FY26 dividend at nil. Its priority remains strengthening the balance sheet and funding strategic objectives.

That approach is understandable while the Paper & Packaging recovery is still developing and parts of Advanced Materials remain exposed to volatile customer demand. The dividend position remains under review, but no timetable for a return to shareholder distributions was disclosed.

Outlook: better foundations, with a near-term balancing act

Trading momentum into FY27 has been positive, with a strong first quarter supporting unchanged full-year expectations. Paper & Packaging has a strong order book and positive momentum in its operational improvement programme.

The challenge is that this progress must offset the expected short-term decline in Advanced Materials revenue. The Group is also exposed to uncertain market conditions, US tariff arrangements, energy prices and customer concentration.

Overall, FY26 represents a meaningful step forward. Profitability improved, statutory losses reversed and leverage fell below one times adjusted EBITDA. Paper & Packaging has moved closer to viability, while Advanced Materials continues to produce the bulk of Group earnings.

The investment case now rests on consistency. Investors will want to see Paper & Packaging sustain its second-half profitability, Advanced Materials manage its expected slowdown, and debt remain controlled without underinvesting in the asset base. The turnaround has gained credibility, but FY27 will show how durable that progress really is.