Essentra plc today announces that it is entering into consultation regarding the proposal to cease the production of folding cartons for the consumer goods industry at Newport, UK and, as a consequence, to close its cartons facility (“IP5”).
Essentra has identified healthcare and certain segments of the beauty industry as offering the most attractive, profitable future growth opportunities for its comprehensive range of specialist secondary packaging solutions. In addition, IP5 remains structurally challenged in terms of its operational and financial performance, notwithstanding the short-term focus and remedial action of the senior management team – together with the significant improvement efforts of the site General Manager and employees. For the six months ended 30 June 20171, the facility generated an operating loss of £(3.4)m on revenue of £6.1m and is not anticipated to make a realistic improvement to profitability in the near, or even long, term.
Against this backdrop, a number of strategic options for IP5 have been assessed by the senior management team, supported by an independent expert third party, in terms of their respective financial, implementation and stakeholder implications. Having given each of these options their careful consideration, the Board of Essentra has concluded that the proposal to close the IP5 facility is the most appropriate route. If the proposal is confirmed, the production of folding cartons in Newport will cease by the end of 2017 and will be overseen by a dedicated project management team, supported by selective external expertise. The proposed closure of IP5 is expected to result in an exceptional charge in H2 2017 of approximately £35m, of which c. £13m represents a non-cash charge
