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Rexam’s wings clipped

TIP UPDATE: Missing first-half forecasts is disappointing for Rexam, but things should improve and the sale of healthcare is a potential catalyst
June 26, 2013

Despite having prepared the market for bad news a few months ago, Rexam's (REX) mild profits warning still put a dent in the drinks can maker's share price. Global can volume growth slowed to a mere 1 per cent in the five months to May, according to chief executive Graham Chipchase, who blamed South America and Western Europe for the first-half miss.

IC TIP: Buy at 453p

Rexam is stepping up its cost-cutting programme, so second-half numbers will be only "modestly lower" than first thought and still better than last year. Volumes are already up in riot-stricken Brazil this month and beneficial contracts in Europe kick in soon. There's unexpected good news on disposals, too. Less than six months after completing the £439m sale of its personal care division, the non-core healthcare business is up for sale. And there has already been plenty of interest.