Investors clearly expected the worst from Essentra's (ESNT) full-year results, if a 15 per cent share price rally is any indication. But things were hardly rosy. Hefty write-downs and other charges ensured the group missed its revised operating profit target, issued last November.
The plastic and fibre products group revealed adjusted operating profits of £132m for the year to the end of December, 29 per cent lower at constant currencies. That figure undershot the lower end of the revised guidance, itself Essentra's second downward steer of 2016. The troublesome integration of a specialist packaging division acquired from Clondalkin Group resulted in a £124m fair value write-down.
Like-for-like revenues also declined significantly through the year, undermined by short-term issues in the group's filter products business. This division, which supplies filters and packaging to the global tobacco industry, has found the going tougher following tax and duty hikes in both China and India. Essentra's prospects in this space, along with those of the wider tobacco industry, could turn bleak if the relevant authorities pursue a punitive tax and regulatory campaign against the tobacco industry.
Prior to these figures, Jefferies guided for adjusted profits of £96.6m and EPS of 24.9p for 2017, rising to £108m and 28.4p in 2018.
| ESSENTRA (ESNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 484p | MARKET VALUE: | £1.27bn | |
| TOUCH: | 484.4-484.6p | 12-MONTH HIGH: | 894p | LOW: 367p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 226p* | NET DEBT: | 63% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 0.66 | 74.9 | 24.3 | 12.5 |
| 2013 | 0.80 | 86.4 | 26.3 | 15.4 |
| 2014 | 0.87 | 99.7 | 30.0 | 18.3 |
| 2015 | 1.01 | 73.8 | 21.4 | 20.7 |
| 2016 | 1.00 | -62.5 | -19.8 | 20.7 |
| % change | -1 | - | - | - |
Ex-div: 16 Mar Payment: 2 May *Includes intangible assets of £582m, or 221p a share. | ||||
