Accrol profits wiped out by macro factors

Toilet paper supplier Accrol has seen its profitability "considerably" impacted after it remained sensitive to external macro-economic variables and increasing paper costs in the first half of its trading year.

Accrol, which transformed its operations to address internal cost issues and customer margins just last year, warned that the continued weakening of sterling against the US dollar had "impacted profitability considerably".

The negative impact of rising input costs, combined with moves in foreign exchange markets, on the group's profitability left a £5m hole in its bottom line and, should the current USD exchange rate and high tissue prices prevail, Acroll estimates input costs will rise by a further £3.5m in the second half of the year.

Given macro-economic headwinds, the AIM-listed outfit now expects that its full-year adjusted EBITDA will be just £1m.

Chief executive Gareth Jenkins said: "Whilst the ongoing macro headwinds encountered by the UK tissue converter industry as a whole in FY19 to date are beyond our control, we are building a more robust business which is increasingly resilient and agile under adverse macro conditions."

"We are confident that we can create a solid business which delivers acceptable levels of return even under difficult macro conditions and additional upside for shareholders given fair winds."

As of 1000 GMT, Accrol shares had sunk 30% to 14.70p.