Sales increased slower than expected at North West tissue giant Accrol during its most recent financial year because of the impact of the Covid-19 pandemic.
The Blackburn-based firm, which is listed on AIM, added that sales across the whole industry "have been depressed in recent months, while consumer stockpiling unwound".
The group's update comes in a statement issued to the London Stock Exchange ahead of its final results for the year to April 30, 2021, being released in July.
While saying it is now "more operationally efficient than it has ever been", the group confirmed that its market share continued to rise and is now 16%, up from 13% in the prior year.
The group's revenue increased from £134.8m to £136.8m while volumes on a like for like basis declined by 3.9%, against a total market decline of 5.5%.
Net debt at the end of the period was £14.6m, compared with £18.1m at October 31, 2020, and £17.9m at April 30, 2020.
Chief executive Gareth Jenkins said: "I am pleased to report a continued improvement across the enlarged group, and I am particularly proud of our employees, who have responded magnificently, keeping all our operations open and maintaining the highest standards in service and product quality for our customers.
"The integration of LTC, which is now complete, has delivered some fantastic results that will benefit the wider group in the long term. In this pandemic year, we have fully automated our largest factory, installed a business-wide operating system, and grown our margins further.
"We now have a business capable of benefitting further, as the UK exits lockdown, and we remain excited about the future for the group."
On the company's future outlook, the group added: "Whilst remaining mindful of the ongoing challenges of the Covid-19 pandemic, the board views the future with confidence, building on the group's strengthened customer relationships, improved levels of service and quality, and its higher value product range.
"The group expects volumes across the UK tissue sector to normalise in H1 22 and that its main market, the discounters, will grow strongly, as the UK returns to pre-pandemic shopping patterns.
"Input costs already announced by the industry are increasing significantly in the near term given the rise in global pulp prices and other commodities.
"Raw material stock levels have been expanded to provide some short-term mitigation, whilst price recovery measures are enacted.
"The group is making good early progress in recovering these higher costs, as it moves into the new financial year."
