February 17, 2017 / 8:34 AM / 3 years ago

Essentra full-year profit falls 26 percent on integration woes at biggest unit

(Reuters) - Essentra Plc (ESNT.L), a supplier of speciality plastic and packaging components, said full-year profit fell 26 percent on flagging sales at its health and personal care packaging unit, due to integration issues from an acquisition completed in 2015.

This reiterates the challenges the company has been facing, prompting it to issue profit warnings three times in the past 12 months.

Essentra shares opened 3.9 percent lower at 405 pence at 0805 GMT on Friday on the London Stock Exchange.

The health and personal care packaging unit, which bought the specialist packaging division of the Clondalkin Group, is the company’s biggest business, accounting for about 40 percent of total revenue. Operating profit at the unit fell 44 percent.

Milton Keynes, Buckinghamshire-based Essentra had indicated on Jan. 23 that sales at the business were more challenging than previously expected after the consolidation of assets bought from the Clondalkin Group.

The company had said in January that its new chief executive had initiated a strategic review of the company and that the health and personal care unit would be receiving “specific short-term focus and remedial attention” from him. [nL4N1FD2T9]

Essentra does not expect an improvement in the unit’s performance in the near term, the company said on Friday, adding that the challenges faced at the business would hurt its like-for-like sales and adjusted operating profit in 2017.

Essentra completed its $455 million acquisition of the Clondalkin Group assets from an affiliate of Warburg Pincus in February 2015. (reut.rs/2kZhIp2)

“In particular, the integration issues primarily relating to the Clondalkin acquisition in Health & Personal Care Packaging... not only resulted in additional cost but also in an accelerating decline in the underlying trading position at the impacted sites,” the company said in a statement.

The company, which was formed after being demerged from Bunzl Plc (BNZL.L) in June 2005, said full-year pretax profit fell to 119 million pounds ($148.62 million) from 161 million pounds a year earlier. [nRSQ1628Xa]

Like-for-like revenue, excluding its Porous Technologies business that is set to be divested, fell 9.1 percent to 999 million pounds at constant currency rates.

($1 = 0.8007 pounds)

Reporting by Vidya L Nathan in Bengaluru; Editing by Sunil Nair and Subhranshu Sahu

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