Three years ago, Essentra (ESNT), at that time called Filtrona, was a rather dull cigarette filters maker with a share price languishing below 300p. But then new chief executive Colin Day came on board with an ambitious plan to achieve double-digit growth in earnings per share, backed by solid organic growth and bolt-on acquisitions. The strategy has been a success. The company's share price has soared to new heights and its market capitalisation has quadrupled since the end of 2010.
"We are in good shape, everything is growing," says Mr Day. The filters division was the star performer last year, delivering a 41 per cent increase in operating profit even against the backdrop of a declining tobacco industry. Mr Day says innovative products such as flavoured filters and a focus on the big potential of Asian markets have been the drivers of Essentra's success. Electronic cigarettes are the next big target, with the company planning to take its own offering to its big tobacco customers.
Strip out the impact of acquisitions and currency, and like-for-like revenues rose 9 per cent year on year in 2013, while adjusted earnings per share rose 20 per cent to 38p. Broker JPMorgan Cazenove does not expect any material changes to consensus estimates and is currently forecasting adjusted earnings per share of 43.7p for 2014.
ESSENTRA (ESNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 854p | MARKET VALUE: | £2bn | |
| TOUCH: | 853p-854p | 12-MONTH HIGH: | 899p | LOW: 575p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 170p* | NET DEBT: | 54% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 444 | 32.3 | 5.8 | 7.78 |
| 2010 | 490 | 61.6 | 23.3 | 9 |
| 2011 | 541 | 64.3 | 20.9 | 10.5 |
| 2012 | 663 | 74.9 | 24.3 | 12.5 |
| 2013 | 798 | 86.4 | 26.3 | 15.4 |
| % change | +20 | +15 | +8 | +23 |
Ex-div: 9 Apr Payment: 2 May *Includes intangible assets of £397m, or 169p a share | ||||
