Join our community of smart investors

RPC sets sights beyond Europe

RESULTS: Currency and polymer price headwinds have eased for RPC, but we await more evidence of recovery in continental Europe
November 28, 2013

Rigid plastics packaging specialist RPC (RPC) had some respite from polymer price and currency headwinds in the first half. A favourable translation impact from the euro was the main driver of the increase in revenues - 66 per cent of RPC's turnover is in the eurozone. And, unlike last year, the impact of polymer prices was neutral in the first half.

IC TIP: Hold at 502p

That helped drive a half-on-half increase of over £3m in adjusted operating profit although, on a year-on-year basis, operating profit was a shade lower at £46.6m, compared with £47m last year, as weakness persisted in continental European markets. Outlook comments suggest the picture there may be brightening, with second-half trading said to have started well. "I am cautiously optimistic that the environment is improving slightly," says chief executive Pim Vervaat.

In the meantime, expansion beyond Europe is a key part of RPC's new Vision 2020 strategy. There are plans to expand what is currently a small production facility in North Americas and management is looking at establishing production facilities in BRIC (Brazil, Russia, India and China) markets.

Broker JPMorgan Cazenove has maintained its full-year adjusted EPS forecast of 37.1p (34.8p in 2013), with 41.7p forecast for 2015.

RPC (RPC)
ORD PRICE:502pMARKET VALUE:£835m
TOUCH:501.5p-502p12-MONTH HIGH:527pLOW: 375p
DIVIDEND YIELD:3%PE RATIO:24
NET ASSET VALUE:153p*NET DEBT:65%

Half-year to 30 SepTurnover (m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201248429.212.94.30
201352530.113.44.50
% change+8+3+4+5

Ex-div: 18 Dec

Payment: 24 Jan

*Includes intangible assets of £98.6m, or 59p a share