Accrol Group Holdings PLC (LON:ACRL) boss Gareth Jenkins will admit that the toilet paper maker is not the most glamorous business but it should not be overlooked by investors.
The company, which supplies private label toilet roll, kitchen towel and facial tissues to almost every retailer in the UK, expects a return to profitability this year after improving margins despite taking a £10mln hit related to foreign exchange headwinds and higher input costs.
READ: Accrol Group slashes losses after restructuring
It has managed to do so through a recently completed overhaul of the business that included cutting jobs, reducing the number of product specifications it produces and raising prices.
Jenkins said the restructuring helped to lift margins by roughly 10% in the year ended April 30, resulting in estimated adjusted earnings (EBITDA) of £1mln, up £7mln on the prior year.
“We now have a good foundation for us to push on and continue to grow profitably,” he said.
He expects the company to continue to grow ahead of the market. Last year Accrol grew by 12%, compared to 8% for the rest of the sector. The total market is currently worth an estimated £1.5bn.
Jenkins said the company is aiming to supply every retailer in the UK. The only two retailers Accrol does not directly deal with at the moment are Asda and J Sainsbury PLC (LON:SBRY), he said.
While Accrol remains firmly focused on its UK operations, it has left the door open to potential acquisitions that would complement the business and reduce its currency impact.
On why investors should consider putting money into Accrol, Jenkins said it is an undervalued stock with products growing at an exceptional rate in the UK, good margins and the potential to deliver consistent returns.
“I like it because my kids hate it because it’s not very glamorous,” he joked, adding that the company produces something consumers need no matter what the economic climate.