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27 Aug 2020 | 13:14

Essentra considers restarting dividends as trading improves

(Sharecast News) - Essentra said business was improving and that it would consider restarting dividends in the current year as it posted a 40% decline in underlying profit. Adjusted operating profit for the six months to the end of June fell to £29m from £48m as revenue dropped 11% to £448m. The company paid no interim dividend

The FTSE 250 components and packaging company said it was on track to meet market expectations for annual profit after the Covid-19 crisis reduced like-for like revenue by 8.5% in the first half.

Like-for-like revenue from components such as plugs, caps and knobs fell 12.8% with a 20% drop in the second quarter when the crisis was at its peak. Like-for-like packaging revenue fell 3% and total filters revenue fell 11.2%.

Essentra said trading improved towards the end of the second quarter and that in June group like-for-like revenue fell just 0.5%.

Chief Executive Paul Forman said: "We have delivered a resilient financial performance in the first half of the financial year, despite the pandemic. Although the timing and profile of recovery remains uncertain - and barring a major second wave to the pandemic - based on recent trading and internal forecasts, our current expectation for the year to 31 December 2020 is that the resilient performance seen to date will continue with revenue and adjusted operating profit within current range of analyst expectations.

"The HY 2020 interim dividend is cancelled. However, the company's strong operating cash flow position, coupled with the board's recognition of the importance of dividends to all shareholders, means that the board will keep under review the possibility of a resumption of dividends for FY 2020."

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