Essentra to close sites in components, packaging divisions to save cash

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Essentra PLC (LON:ESNT) said it is planning to close some sites across both its components and packaging divisions this year after reviewing its expenditures.

The closures will cost GBP17mln and are expected to deliver annual savings of GBP13mln from 2022 onwards, which in turn will improve profits.

READ: Essentra expects continued revenue progress in final three months of the year

In the year to December 31, 2020, the filter’s manufacturer said it expects to deliver operating profit in line with the consensus of GBP59mln-GBP63mln.

In the fourth quarter, the FTSE 250 group’s revenue dipped by 1%, having improved from a fall of 7% in the third quarter and of 10% in the prior three months, while it ended December with GBP285mln in cash.

Recent order book trends in the components section are demonstrating continued steady progress across all regions, the firm said, while the packaging division has seen softness in certain end markets owing to a reduction in the levels of prescriptions and elective surgeries through coronavirus lockdown periods.

However, recent order book trends have been somewhat improving, as the pharmaceutical and beauty markets start to slowly recover.

The Filters division had a tougher end to the year, due to logistical challenges in shipping product in Asia derived from regional container shortages.

Full production has been reached for the previously announced outsourcing contract wins and the China joint venture remains on track to commence production towards the end of the second quarter in 2021, Essentra added.

Shares rose 4% to 331p early on Friday.

–Adds shares–

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