Essentra Q1 Report 2023
Trading update
Consistent with the market environment previously outlined at the FY2022 results, performance has remained robust in our European business during the period, whilst distributors have continued to show signs of destocking, impacting the US in particular. There are signs of improvement in China, which started towards the end of the first quarter.
On a like-for-like (“LFL”) trading day adjusted basis, Group sales were down -9.0% in the period, compared to the same period in 2022. This reflects a particularly strong comparator in the prior year, with significant end-market recovery including improving supply chains which enabled the business to recover historically high orderbook backlogs experienced at the beginning of 2022.
Essentra has sustained strong operating margins in the period, demonstrating the underlying resilience of the Company’s business model. Margins have been supported by proactive implementation of pricing actions and cost management initiatives, including efficiencies in operating costs as well as central overheads.
As anticipated, the business is seeing improved trends since the start of the second quarter. New daily order intake levels are demonstrating growth relative to FY2022, and the order book provides a good level of visibility into the second half of the year.
The Wixroyd business acquired in December 2022 is performing in line with management expectations and integration is on track. Essentra continues to manage a strong pipeline of bolt-on M&A opportunities, which it is pursuing with a highly disciplined approach.