LONDON (ShareCast) - (Sharecast News) - Plastic and fibre products supplier Essentra updated the market on its third quarter trading on Friday, reporting that it reflected the benefits of the strategic actions it had taken, as well as the "increasing stability" across the company.
The FTSE 250 company said like-for-like revenue was unchanged, or up 1.5% when adjusting for the closure of the Newport cartons site, with the packaging division returning to growth.

It said the outlook for the full year remained as it had previously communicated.

Components reportedly delivered a "robust" organic result, with total revenue growth boosted by the ongoing successful integration of Micro Plastics and an early contribution from the acquisition of Nolato Hertila in July.

The full-year 2018 outlook was for further revenue growth, and a stable margin compared to 2017.

Essentra's packaging division reached an inflection point, and returned to underlying growth after adjusting for the closure of Newport cartons in excess of 4% during the period, with a "meaningful improvement" reported from both the Europe & Asia and North America geographies.

The board said the full-year 2018 outlook was for an improved year-on-year trend in revenue and margin.

In filters, Essentra said "good" strategic progress was being made on each of the three potential "game changers", however project volatility - particularly in Europe - resulted in an underlying revenue decline in the third quarter.

The full-year 2018 outlook was for a moderate decline in year-on-year revenue and a stable margin.

Specialist components saw a modest decline in sales, which was largely put down to the continued poor performance of Tear Tapes, where a strategic improvement plan was being implemented.

Full-year 2018 year-on-year revenue was expected to be stable, but with the margin below 2017.

In September, the company announced the intended closure of the commercial print and consumer packaging site in Largo, US, as well as consultation processes at each of its commercial print facility in Kilmarnock and Nottingham regarding the production of speciality tapes.

The firm said the Largo facility was expected to close by the end of 2018 and, if the proposals in the UK were confirmed, the Kilmarnock site would close and speciality tapes cease production in Nottingham by the same date.

Regarding the latter, Essentra said neither the Tear Tapes business based at Nottingham, nor the vast majority of the speciality tapes activities which are located in the US, would be affected by the proposal.

For the nine months ended 30 September, those businesses generated combined revenue of £16m and an operating loss of approximately £1m.

Essentra said the closures would result in an exceptional charge in the second half of 2018 of £12m.

The cash element of that charge - £4m - was expected to be offset by the anticipated proceeds realised from the disposal of the assets and freehold property in Largo, such that the total cash flow impact of the site closures would be at least neutral.

"I am pleased with both the improved stability that we are continuing to drive throughout the organisation, as well as the solid progress we are making on our strategic objectives," said Essentra chief executive Paul Forman.

"The return to growth across our packaging division is particularly gratifying and, being well underpinned, is set to continue.

"Accordingly, we remain confident that we are on track to deliver an improvement in both revenue and operating margin for the company."

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