The AIM-listed firm said for the 52 weeks ended 31 March 2018, its revenue rose to £96.3mln from £92.4mln, but pre-tax profit fell to £4.5mln from £5.5mln a year earlier.
The company said the impact of higher pulp prices added an estimated £3.5mln to material costs for the year.
James Cropper said the board is recommending a final dividend of 11.0p per share, taking total dividend to 13.5p per share, up 14% from 11.8p a year earlier.
Mark Cropper, chairman of James Cropper, commented: "As intimated by the recommended final dividend increase, the Board and I continue to be excited about the prospects of the group.“
He added: “We recognise there are significant challenges in recovering the margins lost in paper to pulp costs and that continued research, innovation and investment will be vital to maintaining our position and creating future value.”
In early morning trading, James Cropper shares fell 0.72% to 1,385.00p.