It's been one year since Rexam's (REX) proposed merger with Colorado-based plastic packaging manufacturer Ball was first announced, yet the £4.4bn deal once again grabbed the headlines on results day. Having recently received clearance in Europe after selling 10 plants, the beverage can maker's bosses now expect the tie-up of the two giants to be completed in the first half of 2016.
This topic provided a welcome distraction from what was an uninspiring set of results in 2015. Decent demand for speciality cans saw Rexam deliver volume growth during the period in all regions bar North America. Given weak global economic growth and the success of last year's World Cup in Brazil being a tough act to follow, management's satisfaction is understandable.
But 2 per cent volume growth, or 4 per cent when factoring in the acquisition of United Arab Can Manufacturing, wasn't enough to boost the bottom line. Underlying operating profit fell 3 per cent as the group grappled with higher energy costs in Brazil, the non-recurrence of a £16m tax credit and the commoditisation of speciality cans in the key US market.
The response to these ongoing threats, pricing pressures in Europe and weak economies of South America and Russia was to continue focusing on tightening costs. Fortunately, a favourable swing in aluminium premiums may also ease this challenging backdrop.
Bloomberg consensus forecasts give adjusted EPS of 41p, up from 39.1p in 2015.
| REXAM (REX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 605p | MARKET VALUE: | £4.3bn | |
| TOUCH: | 604-605p | 12-MONTH HIGH: | 615p | LOW: 503p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 199p* | NET DEBT: | 88% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 4.23 | 402 | 33.1 | 14.4 |
| 2012 | 3.89 | 319 | 27.8 | 15.2 |
| 2013 | 3.94 | 339 | 32.0 | 17.4 |
| 2014 | 3.83 | 343 | 36.2 | 17.7 |
| 2015 | 3.93 | 250 | 25.9 | 17.7 |
| % change | +2 | -27 | -28 | - |
Ex-div: 7 Apr Payment: 6 May *Includes intangible assets of £1.3bn, or 189p a share | ||||
