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Investing.com -- Essentra Plc (LON:ESNT) on Thursday delivered a mixed third-quarter trading update on Thursday, reporting healthy sales growth that was offset by negative margin impacts from regional performance variations.
The company posted organic constant currency sales growth of 5.9% year-over-year for Q3 2025, a significant improvement from the 1.1% decline seen in the first half of the year. Order intake increased by 5.6% compared to the same period last year, with September returning to second-quarter levels after seasonally softer months in July and August.
Despite the sales growth, Essentra reported that gross margins were "slightly weaker" than expected, primarily due to stronger performance in lower-margin Turkish operations within the EMEA region. This regional mix is expected to impact full-year profitability.
The company’s regional performance showed varied results. EMEA returned to year-over-year growth against soft prior-year comparatives, with Turkey delivering strong performance driven by faster end-market growth, pricing initiatives, and currency devaluation.
However, other EMEA markets, particularly in Western Europe and the UK, experienced softer demand in higher-margin countries.
The Americas region maintained low-to-mid-single-digit growth, supported by pricing initiatives and stability in distributor channels. Meanwhile, APAC sales were slightly lower year-over-year, affected by market dynamics in China and tough prior-year comparatives.
Essentra continues to focus on operational efficiencies, with ongoing manufacturing footprint rationalization, selective investments, and progress in its ERP system rollout.
The company maintained strong operating cash flow and free cash flow conversion, supporting management’s guidance that full-year leverage will remain within the medium-term target of 0.5x to 1.5x.
Looking ahead, Essentra expects the full-year 2025 EBITA margin to remain consistent with the first half at 10.8%, as the dilutive gross margin impact from Turkish growth is anticipated to continue into the fourth quarter.
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