Essentra Components History and Business Quality

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So you think Essentra should have higher margins in the long run than RS?

Yes. From memory, and I've not looked at both sets of results, I'm pretty sure that Essentra has got a higher retained margin than RS has, because there's more costs involved in the RS business, even though there's a manufacturing piece there in Essentra, but the manufacturing is a big part of Essentra's strength, and it makes them pretty unique as far as that marketplace is concerned.

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Why?

Well MRO was different, they don't know what's going to break and when it's going to break. If you look at an MRO customer and you look, you took RS’s numbers, you would see that there'll be a 20% commonality of products that are bought last year to this year. The other 80% are different. And of that 80%, there's probably 50% of them that have never been bought before.

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What about for Essentra?

Essentra are a lot more stable because, typically, a manufacturer will go into making a product, and that product will last for a period of time, and sometimes that could be years. If you've got a bed manufacturer, for example, what the hell could Essentra sell them? Beds are sometimes still put on castors. Whether they would buy the castors from Essentra, I don't know. However, do you know when you used to get beds and there was a plastic metal screw on the back of it that you could drop the headboard in there, Essentra sell them and bed manufacturers buy them. There's probably a good commonality across lots of bed manufacturers that make headboards, they want to attach them to their beds to the plastic.

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