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Essentra shares nosedive as European weakness hits profits By Mike Sheen Updated: 12:21 BST, 17 September 2024 e-mail View comments Essentra shares fell by more than a quarter this morning with a third-quarter slump in demand forcing the plastic products manufacturer to slash full-year guidance. The FTSE 250 firm said European demand had once again 'softened' while the Americas had seen 'a slower than anticipated rate of recovery'. It had told shareholders in July that market conditions had improved following a tough finish to 2023 .
But Essentra said it had now been forced to take a 'more cautious view of the likely timing of further modest improvements in market conditions', as well as taking into account 'adverse foreign exchange retranslation'. Essentra pointed to a slowdown in Europe as well as a weaker than expected recovery in the Americas Essentra now expects to post a full-year adjusted operating profit of £40million to £42million, compared to market guidance of £48.4million to £49.
7million. It said: 'The group had previously anticipated a further modest improvement in volumes in the second half, underpinned by ongoing recovery of demand across end-markets. 'However, through August and into September, consistent with the weak PMI metrics widely reported, market conditions in Europe, (including Turkey) have softened.
'Whilst the Americas region has reported a slower than anticipated rate of recovery, APAC remains broadly in line with expectations.' RELATED ARTICLES Previous 1 Next Essentra cuts profit expectations as sales slow Kingfisher lifts guidance despite 'big-ticket' weakness Royal Mail owner accused of rewarding failure as it plans to..
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. Share this article Share Essentra shares fell as much as 25 per cent at the open but recovered to trade 19.4 per cent lower to 134.
8p by late morning on Tuesday. The shares have lost 9.1 per cent over the last year and roughly 70 per cent over the last five.
The group said it remains confident in its ability to bounce back 'when normalised growth returns', sipported by cost-cuttign and efficiency measure.s It will issue results for the three months ending 28 September on 24 October. Analysts at Peel Hunt maintained a 'buy' rating for Essentra, but slashed the target price from 300p to 230p, adding that the firm's balance sheet 'remains strong and capable of taking advantage of future organic and inorganic opportunities'.
The analysts said: 'Although Essentra continues to reduce its cyclicality, performance is still linked to global industry production. 'Importantly, the model remains fine-tuned for market recovery and the potential to deliver strong margins and cash flow is undiminished'. DIY INVESTING PLATFORMS AJ Bell AJ Bell Easy investing and ready-made portfolios Learn More Learn More Hargreaves Lansdown Hargreaves Lansdown Free fund dealing and investment ideas Learn More Learn More interactive investor interactive investor Flat-fee investing from £4.
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