Essentra warns profit to be below expectations

Essentra, the maker of cigarette filters and plastic packaging, warned that it expects profit will be below expectations due to operational issues at its health and personal care packaging unit.

For the 2016 calendar year, the company expects operating profit to be at the bottom of, or modestly below, its previous guidance of £137m-£142m, while the audit is ongoing.

The FTSE 250 company said that due to continuing operational issues in the Health & Personal Care Packaging unit, there was a further “significant” decline in revenue and profitability during the last two months of 2016, and there is no expectation of a near-term improvement in 2017.

As a result chief executive Paul Forman has launched a strategic review of the company and will reveal the outcome alongside results on 28 July.

Meanwhile, the company’s other units, Components Solutions and Filtration Products are performing in line with expectations.

Net debt as the end of 2016 was better than expected at £380m, up only 1.6% from the previous year partly driven by improvements in working capital.

The company also expects to complete the divestment of its Porous Technologies business during the first quarter of 2017, with proceeds between £185-190m be used to repay existing debt facilities. The sale is also expected to result in a significant exceptional gain for the 2017 financial year.