A discount loo roll company which took a punt on floating shortly before the EU referendum believes Brexit provides an opportunity to target the big dogs of the industry. Namely, Andrex.
The Northern company today reported its first results since its initial public offering (IPO) on the alternative investment market (Aim).
Revenue increased by 17 per cent to £118m in the year to 30 April, with adjusted earnings before interest, taxation, depreciation and amortisation (Ebitda) of £15m – up 22 per cent.
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Accrol’s decision to float in June stood out at a time when many other firms were understood to be holding back from making IPO decisions amid referendum uncertainty. After the Brexit vote, a number of IPOs have been cancelled or postponed.
But Accrol has no regrets.
Chief executive Steve Crossley told City A.M.: “I think in hindsight it’s been very good timing for us. There were a lot of comments in the marketplace at the time, around ‘are you you sure you should not be waiting?’” But he added that the “the timing has proved to be nothing but very good”.
The company also believes the Brexit vote, and the chances of a recession, presents it with an opportunity.
“As I cast my mind back to 2008, the real winners… were the discounters,” said Accrol’s chief financial officer James Flude.
“We are the leading player in that [discount] sector, it is a sector that it growing at 10 per cent per annum. We’re primarily supplying private labels… which is taking share from brands. We’re well positioned to take advantage of some of those changes.”
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Asked what brands Accrol can challenge, Flude said: “As we understand it, and from reading the trade press, Andrex is the market leader – which is about… a quarter of the market – is declining at something like eight per cent per annum.
“And there was an article in Tissue World a couple of issues ago where the UK marketing manager talked about Andrex and its decline. And if you read between the lines, they were basically saying that it’s difficult to sell products when they’re not on promotion.”
He believes Accrol’s tissue products offer better value for money than pricier rivals, adding: “You touch and you feel it, there’s not a lot of difference in the product, but there’s a 30-35 per cent difference in the price.”