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FTSE 250 manufacturer Essentra reported an even greater than expected drop in profits in 2016, after the company suffered from what its new chief executive described as a series of “self-inflicted” difficulties across its business.
The group swung to a pre-tax loss of £63m, after taking a £123.9m writedown in its health and personal care packaging business.
Adjusted operating profit, its preferred measure of performance, fell 29 per cent to £132m. The company warned only last month that the figure would be at the lower end or “modestly below” a range of £137m to £142m.
Reported revenues edged up 1 per cent to £1.1bn, but were boosted by the weakness of sterling, and declined by 8 per cent when the impact of currency moves was removed. The company said declines were likely to continue this year.
Essentra has struggled with problems across its business in recent months, with revenues from its filters division also declining, while its pipe protection business struggled along with the wider oil and gas industry that it supplies.
The company said it had already begun a turnaround programme that would focus on “re-establishing stability and accountability”. Though its component solutions and filtration divisions started 2017 “on a more stable footing”, its healthcare division continued to experience “significant decline”.
Paul Forman, who took over as chief executive at the start of the year, said:
Based on my initial assessment, the issues which have evidently impacted 2016 are predominantly self-inflicted, and therefore capable of reversal. The necessary process of stabilising the business will be facilitated by a strengthening of the balance sheet following the imminent divestment of Porous Technologies, an a restructuring of the organisation – together with a measured recruitment of talent – is already underway.