Despite a generally flat trading environment, plastics packaging group RPC has delivered an encouraging set of interim results despite facing record polymer input prices, which squeezed margins in specialist business segments. RPC did manage to pass on most of the production increases to its customer, and while there is an inherent time lag in this process, the impact of polymer price rises should abate in the second half.
RPC achieved a 14 per cent rise in first-half adjusted operating profits, after you factor-in £3.1m in impairments and restructuring costs. These charges relate to a strategic programme designed to reduce the company’s cost base, while improving its cash position. To date £18m of annual savings have been realised and this is expected to rise to £21m when the restructuring completes at the end of this year.
Sales volume increased by three per cent overall, with much of the increase attributable to improvements in the pharmaceuticals, personal care and coffee capsule segments. Pharmaceuticals currently account for just 4 per cent of sales, but RPC management view this segment as a driver for future growth.
Broker Panmure Gordon has edged up its full-year pre-tax profit and EPS by 2.5 per cent to £41m and 29.3p (2010: 26.4p).
| RPC (RPC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 292p | MARKET VALUE: | £289m | |
| TOUCH: | 291-295p | 12-MONTH HIGH: | 314p | LOW: 217p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 157p | NET DEBT: | 47.6% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 352 | 11.8 | 8.1 | 3.1 |
| 2010 | 382 | 18.0 | 13.2 | 3.4 |
| % change | +9 | +53 | +63 | +10 |
Ex-div: 29 December Payment: 28 January | ||||
