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  • Writer's pictureMark Watson-Mitchell

Accrol - No Longer Bogged Down

For some time now I have been following the progress of Accrol (ACRL.L) the toilet paper group. It has had a very rough time over the last year or so, dishing its shares off to a low of 6.25p towards the end of March last year.

The first-half loss reported a few days ago showed some £9m in the red against £6m loss previously. Revenue had fallen 15% to £57.6m, which was on a margin slip from 16.4% to just 12%. The impact of massive restructuring costs coupled with higher tissue cost certainly hit the balance sheet.

Chairman Dan Wright seems positive though, despite being some three months behind his recovery schedule, he is looking for around a £1m pre-tax profit for the full-year. Now that is quite a turn around. And it has been reflected in the company’s share price movement.

Trading at a ‘recovery hoped-for’ price of 11.5p just before the interims were announced the shares have subsequently responded to the more encouraging news – hitting 22.5p as I write this note. They peaked at 165p in May 2017 so the following collapse was pretty devastating.

Accrol Group Holdings plc is a leading independent tissue converter, manufacturing toilet rolls, kitchen rolls, facial tissues and ‘away from home’ products to supply retailers throughout the UK. It imports parent reels from around the world and converts them into finished goods at the Company’s 350,000 sq. ft. manufacturing, storage and distribution facility in Blackburn, Lancashire.

The company currently manufactures approximately 17m units per week and is a key supplier of both branded and private label kitchen, facial and toilet tissue paper to some of the UK’s largest retailers. It has developed and promoted brands such as Handy, Mega, Mighty and Thirsty bubbles, Softy, Sofcell and Envirosoft.

I have to say that I do fancy this company’s shares for a further price recovery over the next year. As the buzz from the company improves between now and the next set of finals – they were in September last year – the shares should see upwards momentum. However, before that we could possibly see a Trading Update just before their year-end of 30th April, there was one in mid-March last year.

If the shares fall back shortly, on profit-taking after the recent take-off in price, then they well see the buyers quickly tucking them away.

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