At last – positive news for Essentra

Paul Forman, the man tasked with tidying up his predecessor’s poorly executed diversification strategy, offered just that on results day. Good progress, he says, has now been made “restoring stability”, “addressing skill and capability gaps” and “developing and articulating clear and data-driven strategies for each of our larger global divisions”.

Of course, big turnaround initiatives often require a lot of patience. As previously flagged, a hurricane in Puerto Rico, higher raw material prices, less profitable tapes revenues and losses made closing down an underperforming folding cartons facility in Newport together with other strategic investments, triggered a 26.8 per cent fall in adjusted operating profit at constant currencies.

On a more positive note, management is now confident that the worst of these setbacks are behind Essentra. The troubled health and personal care packaging unit has since reported an increase in service levels, while the cigarette filter arm is recovering in China, a huge smoking market, and benefiting from innovation. Elsewhere, operational and commercial improvement initiatives continue to boost component solutions, the group’s strongest performer in 2017.

Peel Hunt forecasts adjusted profit of £90m and EPS of 26.9p for 2018, up from £75.4m and 22.6p in 2017.