Essentra Plc (LON:ESNT) saw its shares turn downwards on Friday as it blamed Brexit and a “tougher macroeconomic environment” for a dip in third-quarter revenues.
The FTSE 250-listed maker of bespoke plastic and fibre products reported that like-for-like (LFL) revenues for the three month period had fallen by 2.9%, while also declining 0.6% on an underlying basis.
READ: Essentra shows improved profitability, details ‘no deal’ Brexit preparations
Marginal expansion of Components and mid-single-digit revenue growth in the Packaging division were offset by a fall in incomes from the company’s Filters arm, however, Essentra said it expected this negative trend to reverse in the fourth quarter, thanks mainly to a “significant outsourcing deal”, and as such full-year profits were expected to be “in line with consensus”.
Paul Forman, Essentra’s chief executive said the firm would take cost action to “offset the impact of a softer macroeconomic environment” going forward, while also continuing to deliver strategies for each of its three divisions.
Peel Hunt, the company’s house broker, retained its ‘buy’ rating and 500p target price on Essentra shares, saying that despite the “tougher macro environment and some short-term Brexit impacts”, the new outsourcing contract - one of three “game changer” deals - would provide “secure revenues and profits, with significant additional upside if further business can be secured”.
In early trading on Friday, Essentra’s shares were 1% lower at 418.6p.