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Revenue boosted at RPC

A year on the acquisition trail has boosted revenues for the the rigid plastic and packaging manufacturer - but there's more to come
June 6, 2016

RPC Group (RPC) managed to drive up revenues and adjusted operating profits by a third in the year to March, partly reflecting a 4 per cent rise in like-for-like packaging sales, but also the contribution of a handful of companies acquired during and just before the reported period.

IC TIP: Buy at 806.5p

Sales growth for the rigid plastic and packaging manufacturer would have been more pronounced but for lower polymer costs, which are contractually passed through to customers. Non-packaging revenues surged during the period, and management noted favourable growth trends in the personal care and food sectors.

However, the reported figures don't tell the full story as the largest of the acquisitions, a €650m (£503m) deal to acquire French bottle-top maker Global Closure Systems (GCS), only completed two days before the period end. RPC has a strong track record of integrating and then drawing synergies out of acquired assets, so the capture of GCS, which generated €591m in revenues during 2014, promises to deliver substantial scale benefits to the enlarged group. With other acquisitions successfully bedded in, management felt able to increase targeted synergies from €65m to €80m.

Panmure Gordon anticipates profits of £210m for the March 2017 year-end, leading to EPS of 52p, against £160m and 43p in 2016.

 

RPC GROUP (RPC)
ORD PRICE:806.5pMARKET VALUE:£2.45bn
TOUCH:806-807p12-MONTH HIGH:812pLOW: 569p
DIVIDEND YIELD:2.1%PE RATIO:42
NET ASSET VALUE:294p*NET DEBT:83%

Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2012 †1.1359.623.912.4
2013 †0.9848.217.812.9
2014 †1.0559.022.012.9
2015 (restated)1.2267.119.314.3
20161.6475.619.417.1
% change+34+13+1+20

Ex-div: 11 Aug

Payment: 2 Sep

*Includes intangible assets of £990m, or 326p a share. †Restated with per share figures adjusted for the Jan 2016 1-for-5 rights issue.