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Investing.com -- Shares of Essentra (LSE:LON:ESNT) fell by 3% today as the company’s full-year results showed organic growth decline and a reduced dividend.
The results, which were in line with January’s update, indicated a -2.7% organic growth with a sharper -3.7% drop in the fourth quarter. The adjusted EBITA stood at £40.1 million. Despite meeting some expectations, Essentra’s earnings per share (EPS) came in 2% lower than anticipated due to an approximately £2 million higher interest charge, only partially offset by lower tax.
Free cash flow (FCF) was affected by a £10 million working capital outflow and a lower than expected depreciation charge. Year-end net debt was close to RBC’s estimate at £97 million, resulting in adjusted gearing at 1.3 times. In response to these financials, the company cut its dividend by 22%, maintaining a cover at three times.
The company’s outlook remains cautious, with unchanged expectations for the full year. Essentra is focused on efficiency, enhancing its offerings, and investing in selective growth initiatives amid a slow recovery of end markets. The management team is also actively assessing opportunities in the M&A pipeline.
RBC analysts commented on Essentra’s performance, highlighting the company’s resilience and management’s effective cost control. "ESNT is a unique business and whilst the macro is currently tough, it is encouraging that gross margins have held up well, and we believe management has done a good job regarding costs. We continue to believe ESNT is well placed for recovery and should demonstrate material operational leverage as volumes recover," stated RBC.
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