19th Feb 2016 08:40
LONDON (Alliance News) - Plastic and fibre products company Essentra PLC on Friday saw its pretax profit drop due to one-off costs, but its revenue rose and it hiked its dividend as its non-oil and gas-exposed business performed well, sending its shares higher in early trade as it outlined a positive outlook for 2016.
Shares in the company were up 12% on Friday morning to 835.5 pence, the best performer in the FTSE 250 by some distance.
The FTSE 250-listed firm, which makes consumer and pharmaceutical packaging, plastic-injection moulded components and pipe protection technologies, said its pretax profit for the year to the end of December fell to GBP90.4 million from GBP99.7 million, primarily due to one-off write-offs which hit its operating margin. These mostly related to the acquisition of Clondalkin Specialist Packaging and subsequent site rationalisation measures.
The charges offset an increase in revenue to GBP1.10 billion from GBP865.7 billion a year earlier. Specialist Technologies division revenue was hit by the downturn in spending by oil and gas companies, which drove down revenue from the company's pipe protection technologies unit by nearly two-thirds. This fall also hit the operating profit of the division, due to the high margins earned on pipe protection. Excluding this one segment, sales for the division would have increased in the year.
Beyond the oil and gas hit, however, Essentra's other divisions performed well. The group's distribution unit, which makes specialised components, saw revenue push higher thanks to solid contract wins, the roll-out of new sites and an expansion of its product range. Trading for the unit in Europe continued to improve, while better conditions emerged in the UK in the second half too.
The Filter Products division, which makes cigarette filters, also performed well, as more challenging conditions in China and India were offset by strong underlying growth in its joint ventures in Dubai and Indonesia.
Health & Personal Care Packaging, meanwhile, saw revenue more than double thanks to the acquisition of Clondalkin, though like-for-like growth also remained robust, with an improvement seen in the second half. The division was boosted by contract wins, though the performance was partially offset by a tough tobacco tear tape market.
Essentra will pay a final dividend of 14.4p per share, up from 12.6p a year earlier, pushing its total dividend for the year up to 20.7p, up 13%.
Chief Executive Colin Day said the group has made a solid start to its current strategy programme, covering its growth plans out to 2020, notwithstanding the challenging environment in the oil and gas industry. For 2016, though Essentra remains cautious, it continues to expect profitable growth in the coming year.
"In an environment where economic growth is by no means well-established or uniform - notably in the oil and gas industry - we are nonetheless confident of delivering balanced profitable growth in 2016, due to our international footprint and diverse range of products and end-markets," he added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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