Essentra lowers operating profit forecasts

Essentra says the FY 2016 outlook is now for a like-for-like revenue decline in line with the first half outturn of -7% (previously a mid single-digit decrease), with adjusted operating profit in the range of £137m-£142m (revised from £155-£165m).

The group says trading in Component Solutions is in line with expectations. In Components, growth in Continental Europe and Asia remains strong, with recently-implemented initiatives in the both the UK and the US showing early encouraging signs of slowing the revenue declines evident in H1 2016 - albeit that the latter has yet to establish a consistently improving trend.

But it says the performance of Pipe Protection Technologies remains subdued, despite the Extrusion business continuing to benefit from new contract wins and a greater focus on higher value-added technical profiles in attractive growth sectors.

Health & Personal Care Packaging:

The company says that as previously advised, it anticipates completing the consolidation of the final two Clondalkin Specialist Packaging Division operations in the UK into its new, adjacent site in Newport by the end of this year.

However, while the three facilities in the US and UK which experienced integration issues in H1 2016 continue to perform at improved levels to those seen earlier in the year, they are not delivering the required rate of month-on-month uplift in both revenue and operating profit which was anticipated.

In addition, these challenges have constrained the ability to grow the business in line with previous expectations.

Filtration Products:

The company says it has seen recently-awarded innovative product wins in Filter Products in H2 2016; however, the ramp-up in these new contracts has been slower than forecast.

In addition, the transfer of a particular line of existing business from the US to Asia has been delayed until early 2017.

Taken in conjunction with the continuing prolonged underlying softness in the Chinese market, these factors have resulted in lower-than-expected volume across the site footprint, which has a consequent impact on both revenue and operating profit.