Essentra takes steps for likely sale of its packaging arm

The company packaging unit specialises in supplies of a range of secondary packaging for health and personal care sectors. It has 23 facilities across three geographic regions, including one in Bengaluru, established in 2013, where it has added leaflets to its security-enabled folding cartons product line. Essentra’s packaging wing is currently £897m turnover Essentra’s biggest business unit.

In a statement, Essentra said that its three businesses were market leaders with strong prospects but were at different stages of development with few synergies. The best plan for shareholders is for the company to concentrate on its components division. Paul Forman, chief executive, said: “We have concluded it is in the best interests of all our stakeholders that Essentra becomes a pure play components business over time - reflecting the opportunity to build on its growth strategy and accelerate investment in organic and inorganic growth, leveraging its highly attractive financial model.”

Essentra’s like-for-like revenue rose 5.1% in the third quarter from the earlier year, driven by its core components business’ revenue rise of 28.5%. While filters revenue rose 2.8%, packaging revenue fell 6.1%. Recent orders indicate strong revenue growth for components and filters in the fourth quarter and signs of improvement for packaging. As a result, adjusted operating profit for the full year will be within analysts’ range of forecasts for £80.7m-£84.3m, Essentra said.

“I am pleased with the third quarter performance overall. Components has delivered strong revenue growth, filters has good momentum and packaging continues to manage the difficult conditions within its marke,” Forman said.

In India, Essentra started with the capacity built for cartons and within the first couple of years, it invested in leaflets and then added a few assets to improve the efficiency and quality of the products we supply to customers. The company had recently added capacity in cartons with a brand new six-colour Heidelberg CX-75 printing press