Essentra Plc (LSE:ESNT) released a mixed third-quarter trading update on Thursday, reporting solid sales growth that was tempered by margin pressure due to regional performance differences.
The company achieved organic constant-currency sales growth of 5.9% year-over-year in Q3 2025 — a strong rebound from the 1.1% decline recorded in the first half. Order intake rose 5.6% versus the same period last year, with activity in September rebounding to second-quarter levels following seasonally weaker months in July and August.
However, gross margins were described as “slightly weaker” than anticipated, primarily reflecting stronger growth in lower-margin Turkish operations within the EMEA region. This shift in the regional mix is expected to weigh on full-year profitability.
Regional results varied significantly. EMEA returned to year-on-year growth following a soft prior-year comparison, with Turkey standing out due to robust end-market demand, pricing initiatives, and the impact of currency devaluation. By contrast, Western Europe and the UK saw weaker demand in higher-margin markets.
In the Americas, sales maintained low-to-mid-single-digit growth, supported by pricing discipline and stability across distributor channels. Meanwhile, APAC sales declined slightly year-over-year, affected by market softness in China and challenging prior-year comparatives.
Essentra said it remains focused on improving operational efficiency, highlighting progress in manufacturing footprint optimization, selective capital investments, and the continued rollout of its ERP system.
The company reported strong operating and free cash flow generation, reinforcing management’s expectation that full-year leverage will stay within the medium-term target range of 0.5x to 1.5x.
Looking ahead, Essentra expects its full-year 2025 EBITA margin to remain broadly in line with the first-half level of 10.8%, as the dilutive effect of Turkish growth is set to continue into the fourth quarter.
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