James Cropper Reports Strong Interim Growth with Profit Turnaround

H1 FY26 results: profit turnaround, tighter execution

James Cropper has delivered a clean profit turnaround for the six months to 27 September 2025, in line with the Board’s expectations. Revenue nudged up 3.7%, but profits improved much faster thanks to execution on the new strategy set out in June.

Quick refresher on a couple of terms: Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, excluding pension accounting under IAS 19 and exceptional items. Run-rate means the current level of performance annualised. Net debt is borrowings less cash.

Advanced Materials powering ahead

Advanced Materials did the heavy lifting. Revenue rose 13.4% to £19.0m and Adjusted EBITDA climbed 34% to £5.5m. That was slightly ahead of the Board’s expectations, with growth coming from both established sectors and newer energy-transition applications.

• Established markets like aerospace, defence, construction and medical – about 70% of the unit – grew at a high single-digit rate.
• Nascent markets and trials, around 30% of the unit and weighted to green hydrogen and fuel cells, grew 21% off a softer prior-year comparator. Management flags higher volatility here, which is sensible.
• Tariffs for US customers were passed through, largely offset by less helpful FX, so no material P&L impact.

Opinion: this is the growth engine. Aiming for underlying double-digit revenue growth longer term feels credible if they keep deepening customer relationships. The inherent volatility in early-stage energy applications is the swing factor to watch.

Paper & Packaging: operational progress, still loss-making

Paper & Packaging revenue eased 1.2% to £32.8m with tonnage similar to last year. The division absorbed the previously announced loss of a significant merchant customer, which cut sales by £3.8m versus H1 FY25. Other merchants, graphics and speciality packaging added £3.4m, largely offsetting the gap.

• Adjusted EBITDA improved to a £0.7m loss from a £1.0m loss a year ago.
• The business is reducing direct and overhead costs, streamlining operations and revising shift patterns. Colourform has been fully absorbed into the division.
• Post period end, the Coloursource™ premium coloured paper range launched exclusively with Winter & Co, a long-standing merchant partner.

Opinion: clear evidence of self-help, but it is not through the woods yet. Management is targeting run-rate Adjusted EBITDA break-even in the final quarter of FY26. Delivery on that will be a major credibility win.

Statutory items, exceptional gains and pension

Statutory profit before tax was £2.7m, helped by a £1.0m net exceptional gain. That comprises £1.5m income from disposing of non-core intellectual property, partially offset by £0.5m of restructuring costs. The IAS 19 pension deficit improved to £13.0m from £16.3m a year ago, mainly due to changes in inflation and interest rate assumptions.

Opinion: the disposal gain flatters the statutory result, but the adjusted performance still shows a genuine operational improvement. The lower depreciation charge following last year’s impairment also helped profits, which investors should note when comparing periods.

Cash, leverage and capital discipline

Net debt fell to £10.5m, down £2.6m year on year and £2.4m since March 2025, supported by cash generation, £1.0m net exceptional receipts and £0.8m of tax refunds. The leverage ratio improved to 1.3x last-12-months Adjusted EBITDA from 3.3x a year ago. Working capital increased by £1.8m, mainly timing effects and higher late-period revenues.

Capital discipline remains front and centre, and the Board does not intend to pay dividends through to September 2026. If you are investing for income, you will be waiting a while; if you are investing for turnaround momentum, this helps preserve cash to complete the reset.

Guidance and outlook: revenue flat, earnings up

• Trading post period end has been robust in both divisions.
• Full-year Group revenue is expected to be similar to FY25, so the growth story near term is margin, not sales.
• Full-year expectations for Adjusted EBITDA are unchanged, with significant growth versus last year.
• Paper & Packaging is targeting run-rate break-even Adjusted EBITDA in Q4 FY26.
• Year-end net debt expectations are unchanged, with exceptional costs and capex weighted to H2.

Opinion: guidance feels conservative on revenue, which is sensible given the merchant customer reset and the inherent volatility in early-stage Advanced Materials programmes. The focus is rightly on execution, mix and cost.

Divisional snapshot for investors

Why this update matters

• Proof of delivery: Adjusted PBT of £2.1m versus a £0.2m loss last year demonstrates early payoff from the strategic reset.
• Balance sheet moving the right way: leverage at 1.3x gives flexibility to keep investing without stretching the balance sheet.
• Clear milestones: Q4 FY26 break-even target for Paper & Packaging is measurable. Hitting it would de-risk the equity case.
• Risks to track: volatility in nascent energy-transition demand, execution risk in the ongoing restructuring, and revenue headwinds from the merchant customer change.

What to watch next

• Advanced Materials order flow across both established aerospace-defence customers and energy-transition trials.
• Coloursource™ traction with Winter & Co and how quickly it offsets the merchant customer loss.
• Quarterly run-rate in Paper & Packaging as cost actions bed in.
• Cash discipline through H2 as exceptional costs and capex land, keeping net debt near guidance.

Final thought

This is a solid interim from James Cropper. Revenue growth is modest, but margins, profits and leverage are moving the right way, and management is doing what they said they would do. If you want the long-form strategy, the 18 June Capital Markets Event recording is available at jamescropper.com/investors. Near term, it is all about execution – particularly getting Paper & Packaging to break even while keeping Advanced Materials on its growth path.