(Alliance News) - Essentra PLC on Friday said revenue was only slightly lower in the fourth quarter of 2020, having managed a steady improvement since a low point in the second quarter, with the firm now on track to meet operating profit consensus.
Shares in Essentra were up 5.5% at 336.00 pence in London in morning trading.
On a like-for-like basis, revenue in the fourth quarter was down 1.1% compared to the same quarter of 2019, managing to maintain a "trend of steady quarterly improvement since the nadir in Q2" of down 9.8%.
In light of this, the FTSE 250 plastics and fibre products manufacturer is now expecting to post an annual 2020 operating profit - adjusted to exclude intangible amortisation on acquired assets and exceptional operating items - in line with consensus from analyst forecasts. Forecasts range between GBP59 million and GBP63 million. In 2019, the company's adjusted operating profit was GBP88 million.
Components second quarter revenue in the fourth quarter was down 0.4% on a like-for-like basis from the prior year, having been 20% lower in the second quarter.
Packaging division revenue was 1.3% lower on a like-for like basis in the fourth quarter from the same quarter in 2019, though much improved from being 8.5% lower year-on-year in the third quarter. This meant that the Packaging unit's like-for-like revenue in the second half was down 4.9% from the previous year.
Essentra noted, however, that Packaging's "recent order book trends have been somewhat improving, as the pharmaceutical and beauty markets start to slowly recover and we build on strong customer relationships."
Filters division revenue was down 1.5% from the prior year in the fourth quarter, like-for-like, resulting from "certain logistical challenges in shipping product in Asia derived from regional container shortages", though the division's revenue was up 0.2% like-for-like for the second half as a whole compared to the prior year.
Essentra expects to have ended 2020 within its target gearing range of 1 to 2 times net debt to earnings before interest, tax, depreciation and amortisation. Its liquidity position at December end was around GBP285 million.
In terms of its strategic initiatives, Essentra said: "The company has undertaken a detailed review of its global footprint, which has resulted in the proposed closure of certain sites in 2021, across the Components and Packaging divisions."
Essentra said exceptional cost related to the closures is estimated to be about GBP17 million. It expects to generate savings from the closures in 2021, with annual savings of about GBP13 million from 2022 onwards.
The firm is not expecting to experience "any material direct impact" from Brexit.
By Anna Farley; annafarley@alliancenews.com
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Essentra (ESNT)