Essentra refocuses, packaging ops likely to be sold off
Tuesday, October 26, 2021
Essentra plans to become a “pure play” components business, meaning its Filters and Packaging divisions are likely to be sold off.
The PLC announced the strategic shift today (26 October), and said that as a first step its board would review “the full range of strategic options for the Filters business”.
In Q3 2021, Essentra’s Components wing achieved like-for-like sales up 28.5%, and up 14.2% on the equivalent period in 2019, pre-pandemic. The division had sales of £255m last year.
Filters sales were up 2.8%, while Packaging revenues were down 6.1% “due to delays in the recovery of elective surgeries and prescription levels” caused by Covid-19, and down 15.2% on the same period in 2019.
The Packaging operation, which specialises in secondary packaging for healthcare and pharma, had sales of £363.2m last year and is Essentra’s biggest business unit.
In a statement, Essentra said: “Over the last few years, Essentra has simplified its portfolio into three global businesses, each with leading market positions and a clear purpose and strategy. These businesses all have strong prospects and the potential to deliver compelling returns for investors, but are at different stages of their development and have limited synergies.
“The board has therefore concluded that, in order to maximise shareholder value and the potential of each of its businesses, Essentra should become a pure play global Components business over time. This will enable strategic focus and an acceleration of organic and inorganic growth.”
The strategic review of the £278.3m turnover Filters wing, which supplies the tobacco industry, is likely to run until at least Q2 2022.
Essentra’s corporate HQ is in Kidlington where it also has a Components operation, with another Components site in Jarrow.
Its UK Packaging sites are in Bangor, Bradford, Newmarket and Newport. It has a tear tapes operation in Nottingham, while the Jarrow site also houses a Filters business.
A review of its global Packaging footprint resulted in the closure of manufacturing facilities in Portsmouth, UK, and Moorestown in the USA.
The overall group has operations around the world and had sales of £896.5m last year.