Essentra reported a “strong” performance in its second quarter on Wednesday, with revenue increasing 13.6% year-on-year on a like-for-like basis, making for growth of 7.4% in the first half.
The FTSE 250 company said its components division continued its trend of improving growth, with second quarter like-for-like revenue up by 38%.
Packaging had another “tough” period in the quarter, however, with a like-for-like revenue decline of 4.8% due to underlying market conditions.
Essentra said there was steady improvement as the period progressed, however, with strategic initiatives delivered to support margin improvements.
The “strong start” to the year for its filters operation continued, with revenue growth of 15.4% in the second quarter.
Looking ahead, Essentra said price increases in components and packaging in the second half would offset inflationary pressures.
The company said it was well-positioned to continue the rebound from the Covid-19 pandemic, with a focus on delivering organic growth, cost reduction initiatives and accretive mergers and acquisitions.
In terms of funding, Essentra said it had agreed the issue of $250m (£181.15m) of medium and long-dated private placement debt.
The issue would comprise $80m notes due 2028, $85m due 2031, and $85m due 2033.
Essentra said the covenants on the notes would be in line with those on its existing private placement notes, and its bank revolving credit facility.
The proceeds would be used for general corporate purposes, and to repay shorter-dated bank debt, with its net debt level maintained, thus diversifying the firm’s source of debt finance and lengthening its maturity profile.
Some of the proceeds would be swapped for sterling, in accordance with the group’s hedging policies.
“I am extremely pleased with the strong start to the year that we have delivered. We continue to focus on organic growth and cost initiatives to drive profitability,” said chief executive officer Paul Forman.
“Whilst we remain mindful of external pressures including ongoing cost inflation, we have been quick to adjust pricing in components and packaging to protect margins.
“We have an excellent base from which to drive responsible, profitable and cash generative growth in each of the divisions.”
Forman said the issue of private placement debt would provide the firm with “optimal” long-term funding.
“The strength of our balance sheet, liquidity position and capital structure means we are well positioned to pursue attractive bolt-on acquisition opportunities.”
At 0847 BST, shares in Essentra were up 0.34% at 294p.
