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RPC packs a punch

Success outside Europe and a new acquisition sent shares in the plastic packager up 5 per cent on results day.
November 27, 2014

Rigid plastic package supplier RPC (RPC) overcame flat economic growth in its core European market and high polymer prices to post a 4 per cent increase in like-for-like sales in the first half. International expansion played a key role, as the group's increasing exposure to North American and Asian markets boosted sales of higher-margin products.

IC TIP: Buy at 577p

Thanks to two new sites, the US now accounts for 5 per cent of group sales, up from under 3 per cent. Meanwhile, the June acquisition of ACE Corp, a Chinese plastic packaging and parts manufacturer, brings the number of factories in China up to seven. Asia now accounts for 6 per cent of group revenues.

What's more, RPC announced the acquisition of Iceland-based Promens Group for €386m (£306m) alongside these results. Promens has factories in 20 countries spanning North America, Asia and North Africa, and also brings RPC's market share in the £32bn European polymer market up to roughly 5 per cent. The deal will be part-funded with the proceeds of a proposed £200m rights issue. Despite chief executive Pim Vervaat's eagerness to pursue organic growth outside mainland Europe, he is confident the European economy won't "fall off a cliff".

Broker Deutsche Bank upgraded its EPS forecast for the current financial year by 5 per cent to 46.6p, rising to 50.0p in 2016.

RPC GROUP (RPC)
ORD PRICE:577pMARKET VALUE:£1.1bn
TOUCH:575-577p12-MONTH HIGH:673p488p
DIVIDEND YIELD:2.8%PE RATIO:21
NET ASSET VALUE:199p*NET DEBT:85%

Half-year to 30 SeptemberTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201352530.113.44.5
201458934.913.35.0
% change+12+16-1+11

Ex-div:04 Dec

Payment:16 Jan

*Includes intangible assets of £356.3m, or 190p a share