RPC warns of challenging conditions and limited growth next year
FTSE 250-listed plastic packaging firm RPC Group said that foreign exchange (FX) changes and challenging economic conditions mean that both revenues and profits will be lower this year, while limited growth is expected next year.
FTSE 250-listed plastic packaging firm RPC Group said that foreign exchange (FX) changes and challenging economic conditions mean that both revenues and profits will be lower this year, while limited growth is expected next year.
In a separate statement, RPC appointed Simon Kesterton, a member of the Chartered Institute of Management Accountants, as its new Finance Director, replacing Pim Vervaat who is to step up to the Chief Executive Officer position in May.
As previously announced, Vervaat is to replace Ron Marsh, who notified the group of his intention to quit in October. Chairman Jamie Pike said that the changes mark "the end of an era" after Marsh led the company for 24 years.
Trading subduedAhead of RPC's full-year results to be published in June, the company said activity levels in the fourth quarter (ending March 31st) improved on the preceding quarter with growth in higher added value products continuing. However, when taking into account discontinued businesses, sales volumes will be flat for the year.
"The upturn in January has not been sustained and trading conditions remain challenging against the backdrop of the difficult macro-economic conditions in the Eurozone and the UK which affected overall activity levels and competitive intensity," the company said.
The company warned of the impact of rising polymer prices - near record levels during the year - on its bottom line: it said that while price variations are generally passed on to the customer base, there is a time lag, meaning that operating profits were affected.
Meanwhile, the relative strength of sterling against the euro is to have a negative effect on results this year, meaning that both revenues and profits will be lower than the 2011/2012 financial year. At constant currency, RPC said that its performance would be similar to last year as changes in polymer prices are offset by cost-reduction measures and a better sales mix.
"The continuing lack of growth in Europe, which is expected to continue in 2013/14, has had an impact on the level of profitability," Pike said.
"The overall performance in these challenging trading conditions remains however robust and the group is well placed to benefit from economic recovery from a position of sound financial strength. The board remains confident in RPC's prospects."
As for the 2013/2014 year, RPC said that subdued economic growth and a challenging trading environment means that "limited overall organic growth" is expected.