Essentra PLC (LON:ESNT), a manufacturer of plastic and fibre products, on Friday reported a decline in full year earnings as it incurred impairment charges in its health and personal care packaging business.
Pre-tax profit – adjusted to exclude the impact of intangible amortisation and exceptional operating items – came to £119mln in the year to 31 December 2016, a 26% drop at actual foreign exchange rates and a 32% fall at constant currencies.
Total earnings per share fell 24% at actual foreign exchange rates and dipped 31% at constant currencies to 36.3p.
Revenue came to £1.1bn, a 1% increase at actual foreign exchange rates but a 8% fall at constant currencies.
Essentra blamed the slide in earnings on the deterioration of the health and personal care packaging division and temporary issues in its filter products business.
The company paid a £124mln impairment loss in the health division following what it called operational and commercial challenges in 2016.
Within the unit, the integration of Clondalkin - the US pharmaceuticals and beauty packaging company acquired in 2016 - had “significant issues” and resulted in losses of customers, particularly in the UK, the US and the Netherlands.
In the filter products business, underlying volumes fell, weighed down by the delay of transferring a line of existing business from the US to Asia until 2017 and a slower-than-expected ramp-up in new contracts.
Essentra said the division was also hurt by the maturity of a sizeable contract in Europe, which was not replaced.
Still, the group decided to keep its final dividend unchanged at 20.7p per share.
Looking ahead, chief executive Paul Forman warned that the company expects a reduction in like-for-like revenue in fiscal year 2017.
“In terms of current year outlook, while component solutions and filtration Products enter 2017 on a more stable footing, the health and personal care packaging business is receiving specific short-term focus and remedial action, in light of the continued significant decline in revenue and operating profit during the last months of 2016 and at the start of 2017 - with a deteriorating exit rate which needs to be stabilised.”
Shares fell 3.99% to 404.70p in morning trading.