Chapelthorpe back in profit and looking to expand

The Bradford-based group, which specialises in polypropylene fibre for sectors including the automotive and carpet industries, said it is in early talks over expanding into fast-growing markets such as India and South America.

Chapelthorpe posted a 709,000 pre-tax profit for the year to the end of March, against 3.3m losses a year earlier. Operating profits hit 2.2m against 124,000 losses last year. Revenues grew two per cent to 87.8m.

"We've had a toughish time over recent years but last year and especially this year the business has really started to show what it can do," said chairman Leslie Goodman.

"We've started generating the sort of margins and profits which encourages us to think there's a really solid future for us – that's at a time when the markets have been weak through this recessionary period."

Strong cash generation helped Chapelthorpe drive net debt down to 3.4m from 6.7m. It plans to resume dividends in February next year.

Mr Goodman said the business entered the recession in good shape after a rigorous cost-cutting drive. "We were well placed when things got a bit tough and we are very leanly run," he said.

He added the group's machinery "does not tend to go out of date", meaning only modest capital investment will be needed.

Chapelthorpe also plans to expand its product range. "It's more likely to be new joint ventures with other companies," added Mr Goodman. "We are talking with one or two people."

The group's US fibres business experienced "sluggish demand" from the automotive and needlepunch sectors in the first half. But Chapelthorpe concentrated on winning new business in the filament yarn sector, and sales volumes grew 35 per cent year on year.

It has invested 2.3m in new filament yarn equipment in the UK and US to meet demand.

In Europe, a better mix of products helped lift margins, as did the weak value of sterling which boosted orders.

Chapelthorpe warned over rising polymer prices and said its UK pension deficit has increased to 6.9m as bond yields fell.

The group thanked non-executive director Brian Leckie, who retired from the board after 14 years' service. New non-execs are Jan Holmstrom and Tom Russell.