Manufacturer Essentra suffers £183m loss on heavy load of goodwill from recently sold packaging arm
- Essentra posted a loss of £183.8m for 2022, after making a profit of £28.3m last year
- Its packaging arm was bought for £262m by Austrian company Mayr-Melnhof Group
- The company’s filters business was bought for £312 million by Frank Acquisition Four
Component maker Essentra posted a heavy annual loss after taking a large impairment charge following the sale of its packaging business.
The FTSE 250 company, which makes molded plastics and custom hinges, among other products, posted a loss of £183.8m for 2022, after posting a profit of £28.3m in the year former.
In the fourth quarter of last year, the Milton Keynes-based group completed the sale of its filters and packaging divisions, resulting in a goodwill charge of £182.7m from the former business and leaving it as a component-driven operation only.
Strategic move: Essentra has completed its transition to a pure-play components business after selling its packaging and filter divisions in the second half of last year
Its packaging segment was acquired for £262 million by Austrian manufacturer Mayr-Melnhof Group, while the filters arm was bought for £312 million by Frank Acquisition Four, a subsidiary of Centaury Management.
From its continuing operations, Essentra revealed losses had increased more than sixfold to £31.1m as it booked core costs that were previously allocated to discontinued operations and incurred higher net interest charges .
Still, the divestitures enabled the company to return £150m to investors through a special dividend and share buybacks, and post a net cash position of £113.8m at the at the end of December, compared to a net debt of £234.7 million at the end of 2021.
Managing Director Scott Fawcett said: “While 2022 has brought a number of changes for the organization as a whole, it has laid the foundation for seizing future growth opportunities.”
“We continued to invest organically and inorganically, helping the company grow commercially, while maintaining strong operating margins.”
Essentra sales increased 9.5% at constant currencies to £338m last year amid recovering demand in the Americas and Europe.
The group has also protected its margins by implementing price increases to offset rising transport, labor, energy and material costs.
Trading was impacted by the draconian Covid-19 restrictions in China and the destocking of distributors in the United States.
But the company said China’s easing of lockdown restrictions would benefit the business, while demand in Europe remained healthy and new orders so far this year were 8% higher than 2022 volumes. on a comparable basis.
Shares of Essentra rose 0.9% to 179p on Wednesday morning, although their value has contracted around 44% in the past 12 months.