Shares in James Cropper plc (AIM:CRPR) dropped 5% on Monday morning after the paper and materials group said a major customer had abruptly stopped buying part of its coloured paper range.
The decision follows a sharp decline, around 50%, in sales to the merchant customer during the first quarter of the financial year.
The company, which reports full-year results later this month, said the change would affect its Paper & Packaging division.
However, it also noted that trading in the unit was ahead of expectations in the early months of the new financial year, thanks to gains with other clients and cost-cutting measures.
Despite the loss, James Cropper said it still expects a significant improvement in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the division for the year to March 2026, and is aiming for breakeven by the final quarter.
The firm’s Advanced Materials unit also posted 10% revenue growth in the first quarter.
Shore Capital says it plans to resume full forecasts for James Cropper later this month when the group publishes its audited results for the year to March 2025.
Analysts will provide fresh projections through to 2028, offering a clearer picture of how the company’s new strategy is expected to create long-term value for shareholders.
In a note to clients, Shore said it still backs the investment case, which is based on Cropper either growing its sales or improving profit margins, or both.
If the business delivers on those fronts, it expects profits before tax to rise meaningfully in the years ahead. Further details and analysis will be set out in the full research note once the results are published.
The stock fell 11p to 209p.