UK-based tissue converting company Accrol Group has reported a revenue drop of 4.3% to £62.3m for the six months ended 31 October 2020, down from £57.6m for the same period a year earlier.
The company said this was a result of the short-term change in consumer shopping habits driven by panic buying in March and April 2020 in the first national lockdown.
However, gross margin rose by 410bp to 23.8% as the drive to deliver higher-value products to the consumers accelerated throughout the period.
As a result, adjusted EBITDA increased by 69% to £5.4m.
In November 2020, the company also acquired Leicester Tissue Company (LTC) for £41.8m.
It added that with margins continuing to improve, LTC “contributed positively, and the business continues to deliver strong organic growth and is fully on track to deliver a strong H2 performance and full year 2021 results will be at least in line with market expectations”.
Dan Wright, Executive Chairman, said: “I am particularly proud of the professionalism, commitment and flexibility our employees have demonstrated in the face of the many and diverse challenges, both personal and work-related, which have been thrust upon us by the Covid-19 pandemic.
“Throughout everything, our operations have performed exceptionally well without any disruption to supply.
“The margin improvement that we have continued to deliver in the period is a result of our determination to deliver great products, that the consumer wants, on a consistent basis, and builds on our key partnerships.”
Gareth Jenkins, Chief Executive, added that sales to the group’s top four customers have “continued to grow, and I feel very confident, as the UK emerges from this pandemic, that the growth of the discounters, the private label brands and great value products will accelerate.
“The long-term structural growth in the sector is significant and our recent acquisition of LTC, with its outstanding modern machine assets and capabilities, provides a significant opportunity to accelerate the switch to best value products and place increasing pressure on the leading luxury brands.”