July 28, 2017 / 6:34 AM / 2 years ago

Essentra first-half profit sinks; improvement seen in second half

(Reuters) - Essentra Plc (ESNT.L), a supplier of speciality plastic and packaging products, reported a 29 percent fall in the first-half profit, but said it expected to see improvement during the remainder of the year.

The company has had difficulties integrating its biggest unit, health and personal care packaging, which it acquired in 2015 from the Clondalkin Group.

“While the health and personal care packaging business is continuing to receive specific short-term focus and remedial action, nonetheless the company expects improving trends in the second half of the year relative to HY 2017,” Essentra said in a statement.

Operating profit at the health and personal care packaging unit, which accounts for about 40 percent of total revenue, plummeted 78.7 percent to 4.7 million pounds ($6.1 million). Margins also shrank 800 basis points to 2.2 percent.

The company’s first-half profit was also hurt by “significantly” lower pricing of raw materials at its filters business.

Essentra, which kept its dividend payout unchanged at 6.3 pence, said it expected to see an improvement in adjusted operating margin and like-for-like revenue growth in both the units.

The company, formed after being demerged from Bunzl Plc (BNZL.L) in 2005, said pretax profit for the six months ended June 30 fell to 37 million pounds from 53 million pounds a year earlier.

Revenue rose 5.6 percent to 522.6 million pounds, helped by strength at its components business. On a like-for-like basis, revenue slipped 3.9 percent.

Reporting by Justin George Varghese in Bengaluru; Editing by Gopakumar Warrier

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