Essentra (ESNT) H2 2024 earnings summary

Executive summary

• Delivered resilient performance in 2024 despite challenging market conditions, with stable or expanding gross margins across all regions and revenue of £302.4m, a 2.7% like-for-like decline year-over-year.

• Strong cash flow and high customer satisfaction, with Net Promoter Score up three points globally to 43.

• Employee engagement reached 85%, supporting operational execution.

• Robust balance sheet with net debt to adjusted EBITDA at 1.3x, within guided range.

• Well-positioned for market recovery and operating leverage as volumes return.

Financial highlights

• Total revenue for 2024 was £302.4 million, up 0.3% at constant currency but down 4.4% reported; adjusted operating profit £40.1 million (+2.3% constant currency), margin at 13.3%.

• Adjusted EPS was 8.5p; dividend per share set at 2.8p with a 3× cover.

• Free cash flow reached £22.5 million, with operating cash conversion at 91%.

• Net debt increased to £68.2 million, mainly due to acquisitions and shareholder returns; net debt to adjusted EBITDA at 1.3×, below the 1.5× target.

• Adjusting items totaled £14.0 million, including £9.6 million SaaS costs and £1.0 million acquisition costs.

Outlook and guidance

• No expectation of a second-half recovery; market assumed neutral for the rest of 2024, with 2025 starting in line with expectations.

• Group expects softer environment in Europe, slight improvement in Americas, and continued recovery in APAC.

• Adjusting items for 2025 guided at around £10 million, mainly ERP-related.

• Midterm ambition reaffirmed for 18% operating margin, driven by efficiency, pricing, and acquisitions.

• Regional gross margins to remain strong, with some dilution from growth weighted to Americas and APAC.