Essentra shares dive after the company’s profit warning stubs out expectations
Shares in Essentra dived around 20 per cent in early trading today after the industrial group stubbed out hope that its revenue would recover this year.
The UK-based supplier of plastic and fibre products announced a like-for-like revenue loss of 7 per cent due to its facilities not performing as anticipated and lower-than-expected volume of their cigarette filtration products.
Adjusted operating profit is now expected to be between £137m and £142m, rather than between £155m and £165m, which was already a step down from the company's predictions.
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The supplier of cigarette filters and healthcare packaging led the FTSE 250 fallers throughout the day.
Essentra reported that slow growth in its health and personal care packaging arm, which is its largest revenue driver, is holding the company back. Its three facilities in the US and UK have improved since earlier in the year, but they are still not generating the revenue or operating profit the company expected.
Under the company's component solutions arm, pipe protection technologies performance has been subdued despite moving into a sector with promising growth, while trading in component solutions is in line with expectations.
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New contracts obtained by the filtration products arm have been slower than predicted, and one particular transfer has been delayed until early next year. This has resulted in lower-than-expected volume across the site footprint, which impacts both revenue and operating profit.
All this comes after Essentra's shares dropped significantly in June following a trading update announcing another failure to reach expected results.