The on-going supply chain crisis and shortage of HGV drivers is "restricting revenue" at a toilet roll and kitchen towel supplier to the likes of Tesco, Aldi, Morrisons and Wilko despite it passing on increase energy costs to customers.
Lancashire-headquartered Accrol, in an update to the London Stock Exchange, said pressures on the group's raw material supply chains "have been considerable with further tightening" in recent weeks.
The group added that pulp and parent reel production costs have been impacted across the world by energy cost increases, input shortages, and general inflationary pressures.
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Accrol, in the update for its current financial year ending April 30, 2022, also said that while its supply chain has "shown significant resilience and supply shortages have been managed, considerable cost increases had to be absorbed" in the short term.
In addition, "distribution pressures" such as the availability of HGV drivers, "which served to increase costs further, have restricted revenue growth in FY22".
Accrol said it now expects its revenue to grow by about 25% from the previous year's total of £136.6m during its current financial period and its adjusted EBITDA to improve by about 20% from £15.6m.
The statement added: "These cost increases are successfully being passed on, albeit there will be a time lag in passing on the full impact, resulting in earnings in FY22 being lower than previously expected.
"Overall, operational efficiencies and integration synergies, together with the successful passing on of cost increases, will enable the group to deliver FY22 percentage EBITDA margins in line with those achieved in FY21.
"The market share recovery of the UK discount retail sector within the hygiene category continues to see slow but steady improvement.
"The group is maintaining its discipline of targeting only higher value business and avoiding long-term fixed price agreements, especially in this period of volatility. This continues to ensure that revenue growth is of good quality.
"The short-term external challenges facing the business have no effect on the ongoing execution of the group's strategy.
"The business remains in excellent operational shape with scalable foundations for growth and a strong market position across UK retail.
"Accrol remains well placed to benefit from the ongoing recovery in volumes in the discount sector and a more stable cost environment, as the full effects of the pandemic and broader supply chain and distribution constraints unwind.
"The group continues to operate within its banking covenants and the group's liquidity and cash flow position remain robust with adjusted net debt 2 expected to remain in line with current market expectations."
