* H1 pretax profit rises to 64.2 mln stg vs 60.3 mln stg
* H1 revenue increases to 431.1 mln stg vs 384.6 mln stg
* Filter products revenue up 9 pct
* Shares rise as much as 3.5 pct
(Adds details, CEO comment, share price)
By Aashika Jain
July 31 Essentra Plc, making a push
into the growing e-cigarette business, reported a 6 percent rise
in half-year pretax profit, driven by strong demand for more
The company's shares rose as much as 3.5 percent to rank
among the top percentage gainers on the FTSE-250 Index.
The British company said sales from its filter products
unit, the largest contributor to revenue, rose 9 percent on a
like-for-like basis for the six months ended June 30.
"We can get close to 10 percent for the second half," Chief
Executive Colin Day told Reuters in an interview.
Cigarette makers including British American Tobacco Plc
, Imperial Tobacco Plc and Philip Morris
International Inc have been grappling with declining
sales as more people quit smoking.
But demand for Essentra's filters has not suffered, said
Day. The company's laboratory in the northeastern English town
of Jarrow has performed well, particularly in e-cigarettes.
U.S. sales of e-cigarettes are expected to outpace sales of
tobacco cigarettes by 2020, in part because of the perception -
not proven by long-term scientific evidence - that they are
safer to smoke.
"There is quite a desire by the tobacco companies for
innovation on the filter, and we have capitalised on that," Day
said. "In the last two-three years, we have increased our
margins in the filters business by about 300 to 400 percent."
Not all of this growth is from e-cigarettes. Margin growth
has also been driven by the company's eastward expansion and
some big contracts wins in Asia, said Day.
But it has helped. Essentra has started making non-smoke
filters as it looks to tap the e-cigarette industry.
Filter products accounted for nearly a third of Essentra's
first-half revenue. The company also makes a range of plastic
and fibre products, from cartons to self-adhesive labels.
Though North America supplies about half of Essentra's
revenue and Europe is its next biggest market, Essentra has been
expanding elsewhere through acquisitions in Turkey, India and
the United Arab Emirates.
The company said it expected a negative 7 percent impact
from the strength of the pound against other currencies for the
second half of the year. This would be similar to the first-half
Adjusted pretax profit rose to 64.2 million pounds ($108.6
million) for the first half of 2014 from 60.3 million pounds a
Revenue rose 12 percent to 431.1 million pounds.
Essentra's shares were flat at 773.5 pence on the London
Stock Exchange at 0948 GMT.
($1 = 0.5912 British Pounds)
(Editing by Robin Paxton)