Essentra PLC (LSE:ESNT) announced its financial results for the first half of 2025 on Tuesday, aligning closely with internal expectations. The company posted an adjusted EBITA of £16.5 million, slightly above the £15.7 million projected by analysts.
Despite a 1.1% dip in revenue growth at constant exchange rates, Essentra reaffirmed its full-year outlook. Total revenue for the first half stood at £152.4 million, while the operating margin dropped by 290 basis points year-over-year to 10.8%.
Regional performance was mixed. The EMEA region saw a 4.5% like-for-like revenue decline, whereas the Americas returned to growth, posting a 0.7% increase. APAC outperformed, with like-for-like revenue climbing 9.5%, bolstered by strong export activity from China to other Asian markets.
Gross margins slid to 43.6%, down from 46.4% a year ago. The company cited weaker volumes, geographic sales shifts, and inflation in Turkey as contributing factors. However, second-quarter margins improved to 45.7%, indicating early benefits from operational adjustments.
Essentra expects margin improvement to continue in the second half, supported by efficiency initiatives such as facility consolidations and pricing actions launched earlier in the year. If sales volumes remain consistent with the second quarter, these efforts are projected to lift margins and drive a modest increase in revenue.
Free cash flow reached £9.0 million during the period. Net debt totaled £68.7 million, with gearing at 1.5 times EBITDA. In line with its policy to maintain a full-year dividend cover around three times adjusted earnings, the interim dividend was cut by 36% to 0.8p.
The company also reported a year-over-year increase in new order intake across all regions. Management continues to evaluate opportunities for strategic bolt-on acquisitions.
Progress on the rollout of Essentra’s enterprise resource planning (ERP) system remains on track. The associated £10 million annual cash impact is expected to lessen starting in 2026.
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