17th Sep 2024 09:26
(Alliance News) - Essentra PLC on Tuesday warned it expects annual profit to fall short of current market expectations amid weaker-than-expected trading in Europe and North America.
The provider of components, with a focus on plastic injection moulded, vinyl dip moulded and metal items, had predicted a "modest improvement in volumes in the second half" of 2024, underpinned by ongoing recovery of demand.
"However, through August and into September, consistent with the weak [purchasing managers' index] metrics widely reported, market conditions in Europe, (including Turkey) have softened. Whilst the Americas region has reported a slower than anticipated rate of recovery, APAC remains broadly in line with expectations," Essentra stated.
"The impact of the market back drop on trading since the half year 2024 results, combined with a consequently more cautious view of the likely timing of further modest improvements in market conditions has led to the board revising its expectations for full year 2024," Essentra said.
As a result, Essentra now expects adjusted operating profit for 2024 between GBP40 million and GBP42 million, which would be below company-compiled market expectations of GBP48.4 million to GBP49.7 million.
In response, shares in Essentra fell 19% to 134.80 pence each in London on Tuesday.
In July, it said it expected profit "aligned with market expectations".
Essentra added: "Management remain confident in the business model and that the company is well positioned, supported by a right-sized cost base and robust operations, to benefit from high levels of operational leverage when normalised growth returns. The group continues to balance its investment in value creating opportunities across the business alongside cost mitigation activities and driving efficiencies, which has supported strong gross and operating margins. The balance sheet remains robust, and full year leverage guidance remains unchanged."
Essentra will issue third quarter results for the three months ending September 28 on October 24.
By Jeremy Cutler, Alliance News reporter
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