Better than expected profit growth at Rexam's core drinks can business, particularly in Europe, powered a 7 per cent increase in annual underlying operating profit to £549m. Hopes that the personal care business will be sold soon also helped drive the shares to their highest level since May 2008.
Management confirmed the sale process is very much under way at the underperforming division, which the City thinks could go for around £350m. And, with a strong balance sheet – net debt fell again to £1.3bn – most of that could find its way back to investors. Underlying profit in cans, meanwhile, grew 15 per cent to £447m, driven by progress on volumes, pricing and cost-cutting. That easily offset a very mixed performance in the smaller plastics unit. There, profits fell 13 per cent to £102m, largely due to weaker pricing, high material costs and cautious consumers hitting volumes in North America.
Nonetheless, profit growth and a tight grip on overall costs increased return on capital employed to 13.7 per cent, and will be nearer its 15 per cent target by the end of 2013, according to management. Much of that will come from new contracts in North America due to kick in next year.
Broker Bank of America Merrill Lynch expects adjusted EPS of 37p in 2012 (from 35.7p last year).
REXAM (REX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 395p | MARKET VALUE: | £3.46bn | |
| TOUCH: | 394-395p | 12-MONTH HIGH: | 403p | LOW: 295p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 11 | |
| NET ASSET VALUE | 264p* | NET DEBT: | 56% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 3.42 | 240 | 23.5 | 17.8 |
| 2008 | 4.25 | 221 | 22.2 | 18.7 |
| 2009 | 4.53 | 134 | 11.4 | 8.0 |
| 2010 | 4.62 | 338 | 27.1 | 12.0 |
| 2011 | 4.73 | 431 | 34.7 | 14.4 |
| % change | +2 | +28 | +28 | +20 |
Ex-div: 9 May Payment: 7 Jun *Includes intangible assets of £2.18bn, or 248p a share | ||||
