Loss-making Fife papermaker and specialist coatings group Tullis Russell is expecting a return to profit next year as efficiency savings and reduced energy costs boost the business.
The 204-year-old company yesterday revealed a pre-tax loss of £3.25 million in the year to March 2013 as turnover dipped 3.8% to £159.5m.
The accounts showed the company enjoyed turnover growth of 46% in Asia – where sales grew to £21.9 million – and trade in America also lifted by 40% on the year to £13.4m.
However, there was double digit dips in the company’s core markets with UK sales dropping 15.9% on the 2012 outcome to £42.7m, and European-derived revenues falling by £9m to £74.9m.
The group’s retained positive net funds of £2.7m at year end, down from £4.31m 12 months earlier and more than £11.5m in 2011.
Chief executive Chris Parr acknowledged it had been a challenging period for Tullis Russell as global trading conditions remained difficult.
“As expected, market conditions remained exceptionally challenging over the past year, with the ongoing paradox of lower global demand but higher input costs,” he said.
“Beyond building sustainability for the future through the CHP biomass plant, we have responded decisively to the pressures by expanding our global footprint.
“Sales in Asia are up by 46% nd 40% in North America, which has helped deflect falling sales in the UK and wider Europe.”
Mr Parr said he was confident in his medium-term outlook for the business because of a continuing focus on internal efficiencies and the fact the group was about to realise significant savings on its annual £23m energy bill from the commissioning of RWE npower renewables new £200m biomass plant on part of its Markinch site.
The combined heat and power facility is currently in the advanced stages of commissioning and is due to be fully operational by the end of the first quarter of 2014.
The new plant will eventually provide Tullis Russell with all of its steam and electricity requirement, slashing its annual energy costs at a stroke.
Mr Parr said the power station had been providing steam – which is used to dry newly produced batches of paper – to the company for the past six weeks as part of the commissioning process.
A full switch-on of the RWE plant will see Tullis Russell’s existing inefficient coal-fired power plant mothballed.
Among others moves to improve efficiency was a decision by the firm in October to outsource its on-site warehousing operation to existing distribution contractor DSV.
The move has seen a number of Tullis Russell employees transfer over to DSV under TUPE regulations, meaning the company’s workforce has now reduced to around 470 staff.
Looking forward, Mr Parr said he expected the effect of the biomass coming on stream and the myriad organisational changes and efficiences to help the companyd book its first profit since 2011/12 in the 2014/15 financial year due to begin in April.
“We expect the market conditions facing our industry to remain extremely difficult in the year ahead which, coupled with the global economic uncertainty, will make for another challenging year,” he said.
“Beyond this, our continued global expansion, the benefits which our biomass plant will bring, our relentless commitment to tight cost control control, efficiency improvement programmes, strict pricing and unwavering strategic focus should restore the business to profit.”