Rising raw material costs, negative currency effects and pockets of waning demand in the UK have not stopped British Polythene Industries (BPI) posting seven years of consecutive growth. In 2015 adjusted operating profit rose 7 per cent, prompting investors to send shares in the maker of bread bags and packaging for Haribo sweets up by the same margin.
A slight fall in volumes to 272,000 tonnes was mainly blamed on the loss of an unprofitable refuse sacks contract. But the biggest drags on 2015 numbers were the weak euro, which wiped out a 7 per cent return made on the continent, and soaring polymer costs. Polymer prices shot up by around half between early March and June as production outages led to major shortages. Despite easing since, the group's core raw material still remains around a fifth more expensive than it was a year ago.
That challenging environment makes BPI's performance all the more impressive. Highlights included a 2 per cent increase in demand for silage strechwrap and a return to profit at the North American business following a difficult year marred by plant installation difficulties. There was also good news on the pension deficit. BPI paid £11.2m into the scheme, which, together with a move to the CPI inflation index, saw the shortfall nearly halve to £53.2m.
Broker Investec responded by increasing its adjusted 2016 EPS forecast by 9 per cent to 78.3p.
| BRITISH POLYTHENE INDUSTRIES (BPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 690p | MARKET VALUE: | £189m | |
| TOUCH: | 685-695p | 12-MONTH HIGH: | 755p | LOW: 612p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 273p | NET DEBT: | 43% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 508 | 19.2 | 52.8 | 12.5 |
| 2012 | 479 | 17.0 | 42.1 | 13.2 |
| 2013 | 509 | 18.5 | 47.1 | 14.5 |
| 2014 | 499 | 22.2 | 61.5 | 16.0 |
| 2015 | 468 | 23.1 | 66.2 | 18.0 |
| % change | -6 | +4 | +8 | +13 |
Ex-div: 9 May Payment: 13 May | ||||
