Sales at RPC broke the billion-pound barrier as the rigid plastic packaging manufacturer enjoyed the full-year impact from Superfos – acquired in February last year – and a focus on higher-margin products. Adjusted operating profits jumped 68 per cent to a record £93.5m. These results easily beat analysts' estimates, causing broker Canaccord Genuity to nudge up current estimates for adjusted pre-tax profits from £85m to £86m, giving EPS of 38.5p.
Even after stripping out the Superfos impact there was still 5 per cent growth on a like-for-like basis with stable underlying volumes to the prior year. The integration of Superfos is now largely complete with £10m in cost savings achieved, and a further £5m in savings expected in the year ahead. This has come at a price though, closing a site at Runcorn and exiting the recession-hit plastic vending cup market in Europe and a German automotive components business largely accounted for a £20.6m exceptional dent in the results, with further costs expected in the year ahead.
A stubbornly high oil price also means that polymer prices were strong in the fourth quarter which provided a further drag on results. There is light ahead though, as current polymer futures contracts point towards prices falling in both June and July.
RPC says that the weakness of the euro against sterling will hurt, as a "significant part" of the earnings are made in the eurozone. But RPC is combating this by focusing on higher-margin products like pharmaceutical devices and coffee capsules. It achieved 15 per cent like-for-like growth in these added-value products. It isn't resting on its laurels either. Customers remain keen to replace heavier glass and metal packaging with light-weight injection moulded products, encouraging RPC to put its faith in product development by almost doubling capital investment from £43m to £72m, which is well ahead of depreciation of £45m.
RPC (RPC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 366p | MARKET VALUE: | £605m | |
| TOUCH: | 365.8-366p | 12-MONTH HIGH: | 399p | LOW: 288p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 165p* | NET DEBT: | 62% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 0.70 | 9.80 | 3.51 | 7.18 |
| 2009 | 0.77 | -4.50 | -6.22 | 7.42 |
| 2010 | 0.72 | 19.2 | 10.7 | 8.38 |
| 2011 | 0.82 | 34.6 | 19.5 | 11.5 |
| 2012 | 1.13 | 59.6 | 27.7 | 14.4 |
| % change | +38 | +72 | +42 | +25 |
Ex-div: 8 Aug Payment: 7 Sep *Includes intangible assets of £105m, or 63p a share | ||||
