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RPC aiming to win hearts and minds

The packaging group has re-evaluated its near-term priorities.
July 20, 2017

Shares in RPC (RPC) were on the rise after the packaging group effectively offered a sop to both its critics and shareholders via an annual meeting trading update.

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The group revealed that first-quarter revenues of £960m were well ahead of the corresponding period last year, helped along by the contribution of acquired assets and positive currency translations. Reported and adjusted margins were ahead of management expectations, with the impact of higher polymer prices offset by the aforementioned foreign exchange impact.

We’ve highlighted the group’s appetite for bolt-ons in what remains a highly fragmented plastic packaging market. However, RPC’s determination to scale up and broaden its capacity – or at least the speed at which it has set about achieving these aims – attracted criticism earlier this year, most notably from Northern Trust Capital Markets. The criticism knocked nearly a third off the share price at the time, although it has largely retraced subsequently.

In a Damascene moment, the group now says it doesn’t anticipate making any “significant acquisitions” in the current financial year, but would be looking to increase its organic growth. It has also ordered a review of management incentives, while announcing a £100m share buyback programme.