Essentra sales fall, but profits jump 52%

Essentra has reiterated its full-year guidance despite interim results from showing that the decline in underlying sales accelerated during recent months, as profits jumped by more than half.

The company, which makes component parts for both consumer goods and industrial applications, said revenue came in at £166.3m for the six months to 30 June, down 5.5% year-on-year.

Essentra reported in May that like-for-like sales were down 9% over the first four months of the year. For the first half as a total, LFL sales were down 10.4%, indicating that top-line pressures increased over May and June.

Nevertheless, adjusted operating profits jumped 52% to £23m as the operating margin surged from 8.6% to 13.8%.

"Pricing actions at the start of 2023 combined with disciplined cost management initiatives have supported margin performance partly offsetting sales volume decline in the period, and will continue to benefit the business in the second half of the year," said chief executive Scott Fawcett.

Fawcett added that 2022's acquisition of Wixroyd – the UK supplier of industrial parts for the engineering sector – is performing well and helping it unlock new cross-sell opportunities as products are launched in Europe.

Essentra declared an interim dividend of 1.2p, down from 2.3p last year but in line with its stated policy. The company had "rebased" its dividend last year to account of earnings of continuing operations following the disposals of its Filters and Packaging businesses. It did, however, pay out a £90m special dividend worth 29.8p per share to shareholders in April 2023.

The company ended the half with free cash flow of £15.3m, compared with negative free cash flow of £3.5m the year before.

The stock was up 3% at 159.56p in early deals on Wednesday.