Cost-of-living crisis drives Accrol's first-half growth
By Josh White
Date: Monday 21 Nov 2022
(Sharecast News) - Paper tissue specialist Accrol reported a "strong" first-half performance in a trading update on Monday, delivering "substantial growth" in volume, revenue and profit, as well as further strengthening its market position.
The AIM-traded firm reported a 64% improvement in revenue for the six months ended 31 October, to £121.1m, with volumes increasing 14%.
It said its market share by volume increased further to 21.5%, up from 19.5% at the end of the 2022 financial year, and compared to a "flat overall" UK market.
As it announced in its final results for 2022 in September, private label volumes were now higher than pre-pandemic levels, with the market share growing at an "unprecedented" rate against traditional brands at 54% in the first quarter of the 2023 period, compared to 50% a year earlier.
Accrol said the private label sector had strengthened further since its final results, with its own volumes growing ahead of the overall UK market with private label market share standing at 46%, compared to 44% at the end of the 2022 period.
Looking ahead, the group said its main market of discount retailers and private label products was continuing to grow strongly amid the cost-of-living crisis.
It said it delivered "substantial growth" in the period, with the board "increasingly confident" that the firm's growth trajectory was sustainable.
The volume growth in the first half was expected to continue as consumers moved away from high-cost, low-value branded products in search of better value.
Its directors said that, while they were mindful of the wider economic uncertainties, Accrol's model was "robust" and was on track to deliver results for the full year ending 30 April "at least in line" with market expectations, with net debt reducing ahead of expectations to about 1.5x EBITDA.
Accrol said its understanding of current market consensus for the full financial year was for revenue of £213.5m, adjusted EBITDA of £15m, adjusted profit before tax of £7.1m, and net debt of £26.3m.
"We are clearly very pleased with this set of results where we have seen volume growth of 14% against a flat overall UK market performance over the same period," said chief executive officer Gareth Jenkins.
"We have delivered this by having great quality and value products that meet every consumer's budget.
"Our strong relationship with the retailers and our robust supply model is ensuring we can continue to deliver a strong set of results in a difficult market environment."
At 1205 GMT, shares in Accrol Group Holdings were up 8.77% at 27.9p.
Reporting by Josh White for Sharecast.com.
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