Times are tough at plastic packaging manufacturer RPC, but its self-help measures are tougher. So, although volumes fell 8 per cent in the period, underlying operating profit jumped 19 per cent to £19.1m and underlying EPS grew 67 per cent to 12p.
The big improvements in profitability reflects the ongoing 'RPC 2010' restructuring effort. The group is already ahead of plan with its cost-saving initiatives and has boosted the target from £12m-worth of savings over two years to £16m. As part of the process, five sites have already been closed and a number of efficiency improvements are being pushed through. The programme has also focused on improving cash collection and reduced working capital has helped cut net debt since the year-end by 12 per cent to £103m.
De-stocking by customers has had a major impact on volumes, but RPC is seeing signs that this process has run its course in the majority of the end markets it supplies. However, the group still expects activity levels to be substantially lower than they were before the credit crunch hit.
Any improvements in sales volumes will be very welcome, though, as broker Noble estimates that, following recent efficiency improvements, a 1 per cent increase in volumes could result in an 8 per cent boost to pre-tax profit. Noble forecasts full-year pre-tax profit of £33.1m and EPS of 24.5p (£21.3m and 18p in 2009).
| RPC Group (RPC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 228p | MARKET VALUE*: | £226m | |
| TOUCH: | 227-228p | 12-MONTH HIGH: | 282p | LOW: 115p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 67 | |
| NET ASSET VALUE: | 162p | NET DEBT: | 64% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 381 | -1.7 | -3.1 | 2.9 |
| 2009 | 352 | 11.8 | 8.1 | 3.1 |
| % change | -8 | - | - | +7 |
Ex-div: 27 Dec Payment: 26 Jan | ||||
