Accrol stocks plummet more than 60 per cent

Accrol — the FTSE 100 company that manufactures personal wiping products such as toilet paper, kitchen towels and facial tissues — saw its shares tumble more than 63 per cent today, and the company reported that it “is likely to breach one of its banking covenants.”

It has more than 5.5m circulating shares and each was worth £10.25 when the market closed today. They traded at £15 per share when the market opened, though the price went as low as £9.50 less than two hours before it closed.

Accrol’s shareholder update said to anticipate profits below market expectations, and it attributed the plummeting prices to an “escalation in internal costs, input costs and adverse foreign exchange hedging.”

The England-based company is currently £31m in net debt, though it is projected to reach £34m by the year-end.

AJ Bell investment director Russ Mould said that investors who already bailed out the company last year “will today be fuming” at the update. He cited how the company’s share prices have dropped more than 85 per cent since its June 2016 stock market entrance.

“Accrol’s trading update says the magnitude of cost escalation has only ‘very recently’ become fully apparent to the board of directors,” Mould said. “However, the company has been aware of cost pressures for some time as that was a key reason behind last October’s major profit warning.”

Accrol chairperson Peter Cheung called that time last year “extremely challenging,” and he believed the company had passed the worst: they ushered in a new chief executive, completed a full operational review and began a restructuring process.

But Accrol has not recovered since its October plummet and sank even lower, so the company is now hoping to save £5m by restructuring its underperforming logistics arrangements. The company plans to do that by focusing on quality instead of quantity of products, evaluating how profitable each segment of their business is and opening a new production line in Leyland.

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