RPC hit by restructuring and impairment costs

Rigid plastic packaging supplier RPC Group saw net profit halve in the first half as it was hit by restructuring costs and impairment losses, as it launched its 'Fitter for the Future' business optimisation programme to ensure cost efficiency.

Net profit for the six months to September 30th totalled £13.9m, down from £26.3m in the same period the year before, after incurring £18.5m of restructuring costs, impairment losses and other exceptional losses (which were £4.1m last year).

Nevertheless, adjusted operating profit gained 4% from £45.4m to £47.0m with return on sales improving from 7.7% to 9.1%.

Return on capital employed (ROCE) gained from 18.2% to 19.3%, close to its 20% target by March 2014. The company said that it would have at least reached its target "had it not been for the recessionary Eurozone and UK economies from which circa 87% of the group's turnover originates".

Sales fell from £587m to £518m year-on-year reflecting the impact of a weaker euro with overall volumes down 3% albeit with an improved sales mix.

"This was another creditable performance by the Group in a continually challenging economic environment," said Chairman Jamie Pike.

"The ROCE target set following the Superfos acquisition has been largely achieved but with the prospect of prolonged macro-economic weakness the group has embarked on the 'Fitter for the Future' optimisation programme to ensure that this level of performance can be sustained. Opportunities to grow the business from a position of financial strength through innovation and acquisitions continue to be explored."

The Fitter for the Future programme if focused on optimising the group's mainly European product market combination and includes a range of further cost efficiency measures such as the proposed closure of the Antwerp (Belgium) and Beuningen (Netherlands) sites, medium-term Superfos synergies and the disposal of redundant properties.

Shares were down 5.61% at 402p in early trading on Thursday.