Statement by the Chairman

Cropper(James) PLC
29 March 2001



James Cropper PLC

'Specialist Paper Makers' 
 
 

STATEMENT BY THE CHAIRMAN, J A CROPPER

Despite the continuing good progress of the Converting Division and Technical
Fibre Products, the Papermaking Division has continued to suffer from
particularly adverse trading conditions in the fourth quarter. As a result
the Group overall is likely to incur a loss for the full-year. This loss will
not exceed £1 million including restructuring and other exceptional costs. 
 
Papermaking Division 
As I reported at the half-year the current trading conditions are the most
difficult that we have experienced for many years. The UK papermaking
industry in general has been suffering from the effects of the Euro's
weakness for sometime which has led to significant import penetration from
Europe into the UK market. This has resulted in reduced volumes and downward
pressure on selling prices, squeezing margins and profits overall for UK
manufacturers. 
 
The situation has been aggravated by the rapid escalation in woodpulp and
energy costs. The cost of Northern softwood pulp rose from $480/tonne in
early 1999 to $710/tonne in July 2000 and remained at this level until
February 2001. Even more dramatically the cost of gas has doubled in the past
twelve months and now stands at £0.30/therm. This has meant that our annual
gas bill has risen from £1M to nearly £2M. Subdued demand and low inflation
has prevented us passing all of these cost increases onto our customers. 
 
More efficient running of the paper machines has to some extent mitigated the
effect of these developments.  
 
Management Action 
The Board is taking a series of actions to redress the situation in the
Papermaking Division over the coming year focusing mainly on overhead cost
reductions, increased sales revenue and improved efficiencies. Actions on
overheads inevitably means that there will be an impact on jobs and the
Company has today advised its employees' trade unions and the Department of
Employment that approximately twenty jobs will be lost. The Company takes
this step with great regret but hopes that the majority of these can be
managed on a voluntary basis. The Company's final salary pension scheme has
also been closed to new members. 
 
Capital expenditure in Papermaking in coming years will be contained well
below previous levels. 
 
Outlook 
Some relief is in prospect as the cost of pulp has fallen to $650/tonne in
March with the possibility of further falls to come. Our actions to improve
efficiencies and reduce costs will turn the Papermaking business around but
further losses in this Division may be unavoidable over the next few months. 
 

Although papermaking is a mature industry, we believe there is considerable
potential for growth in our niche markets. As well as working closely with
our existing customers Papermaking Division is refining plans to explore and
develop new markets and new product applications. 
 
Converting Division has performed well in its key market areas of Display
Board and Picture Mounting Board and its results will be ahead of last year. 
 
Technical Fibre Products has made excellent, well documented progress during
the year. Significant new business in composites and fire protection products
has been won in recent months. Our capital expenditure and development plans
for TFP are unaffected by the current situation in Papermaking.  
 

Overall the Group is financially strong, with low borrowings and two of its
three businesses performing well.

 
The final dividend will be maintained at last year's level. 
 
The results for the full year to 31 March 2001 will be published on 18 June. 
 
 
 
 
Enquiries: 
John Denman, Group Finance Director     Alan Cooke 
James Cropper PLC                       Citigate Dewe Rogerson
01539 722002                            0121 455 8370 
                                        07767 771533