Independent tissue converter Accrol Group Holdings updated the market on its current trading for the financial year to 30 April 2018 on Thursday, reporting that it was currently experiencing "more challenging" trading conditions, which were having a significant effect on its trading performance.
The AIM-traded firm said the factors were likely to have less of an impact on the company's trading performance in FY19.
Among the challenges were a "continued increase" in input costs, driven by parent reel price inflation.
In particular, Accrol said there had recently been a further material rise in parent reel prices.
The anticipated inflation recovery through product price increases had delivered less than planned to date, Accrol reported.
In addition, the delay in price increases would have a "reduced positive impact" on the current financial year.
"The company has also incurred higher than anticipated costs in relation to the operational changes associated with preparing the business for growth," Accrol's board explained in its statement.
"The company believes these changes will deliver improved performance over the longer term."
Additionally, Accrol's board said it had recently been advised that a health and safety "incident", which occurred prior to the company's AIM IPO, could now result in a "more significant" fine being imposed by the Health and Safety Executive (HSE) than was previously anticipated.
"Whilst this is not expected to impact on trading, based on advice received by the company's legal advisers, any resulting fine may have a material impact on the company's cash position."
Whilst the revenue expectations for FY18 remained "broadly in line" with market expectations, the board said it had reviewed its expectations of the group's performance.
Based on current market conditions, the board now anticipated that earnings would be "significantly below" existing market forecasts for the current financial year, and as a consequence net debt would be correspondingly higher at year end.
The board said as a result, it would review the dividend for the current financial year.
"Following the appointment of Gareth Jenkins as CEO on 11 September, the board commenced a wide-ranging review of the company's operations with a view to improving its margins and its overall financial performance."
Finally, Accrol's board said that while it considered the anticipated impact of the issues on the company's net debt position, pending clarification of its financial circumstances, it applied for suspension of trading in the company's ordinary shares
on AIM with effect from 0730 BST on Thursday.