Essentra trading in line as revenue declines

Investors in paper and plastics product supplier Essentra were gathering for the company’s annual general meeting on Thursday, where chairman Paul Lester was set to confirm trading for the financial year to date had been in line with the board's expectations.

The FTSE 250 firm’s like-for-like revenue modestly declined as anticipated, but the trend in all three divisions in the first quarter improved compared with each of the previous two quarters, his statement read.

“Component Solutions benefited from growth in both Components Europe and Asia and the stabilisation of the Americas business, as well as continued positive momentum in Pipe Protection Technologies.

“In Filter Products, performance was in line with expectations, albeit reflecting a relatively stronger first half 2016 comparative,” lester explained.

He said a good performance in Asia was offset by a sizeable contract in Europe which matured last year, and by a decline in the Americas which was partly driven by the transfer of manufacturing volume to Asia in the fourth quarter of 2016, as previously announced.

“While Health & Personal Care Packaging continued to deteriorate in terms of both revenue and operating profit in the first three months of 2017, the rate of revenue decline has started to reduce.”

During the period, Essentra announced the completion of the divestment of the Porous Technologies business.

Net proceeds from the transaction were anticipated to be in the region of £185m, Lester said, and would be used to repay existing facilities.

“The pro forma impact of the disposal on Essentra's leverage as at 31 December is to reduce the net debt to EBITDA ratio from 2.3x as reported to 1.4x.”

Subject to shareholder approval at Thursday's AGM, the proposed final dividend for the year ended 31 December 2016 of 14.4p per share would be paid on 2 May to equity holders on the share register on 17 March.

Lester said Component Solutions and Filter Products entered 2017 on a much more stable footing as a result of actions which had previously been implemented, and their prospects were more encouraging than in the latter part of 2016.

“As highlighted in February, given the continued significant decline in revenue and operating profit during the last months of 2016 and at the start of 2017, Health & Personal Care Packaging is continuing to receive specific short-term focus and remedial action.”