Personal Care unit dents Rexam

Global consumer packing company Rexam posted a three per cent like-for-like rise in sales during the first half of the year, pushed higher by a six per cent increase in the total number of beverage cans volumes.

Revenue for the year came in at £2,165m, compared to £2,095m the same half the previous year, with underlying pre-tax profit at £207m (H1 2011: £204m) and underlying earnings per share up from 16.7p to 17.1p.

The group recently announced its intention to sell its loss-making Personal Care division; with this division included, underlying profit before tax was £225m.

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However, it was by no means all good news as statutory pre-tax profit fell from £192m to £166m and the firm turned in a post-tax loss for the period at £52m, compared to a profit of £132m the previous year, as its Personal Care division put a £171m dent in the bottom line. Total basic losses for the period were 6p compared to earnings of 15.1p the same period in 2011.

Underlying operating profit from continuing operations improved 2.0%, in spite of a number of headwinds including higher aluminium conversion and labour costs.

As at June 30th, net debt was £1.35bn, compared to £1.3bn at the end of 2011.

In Europe, utilisation improved as a result of higher volumes and in North America it increased as the firm started to recover volumes lost in 2011. There was also better utilisation in South America as market growth resumed and it started to recover some of the market share lost to additional competitor capacity last year.

The firm said: "Beverage Cans traded well with the global growth of speciality cans and the performance of the North American business overcoming cost headwinds. As indicated previously, we had some specific challenges in Healthcare.

"In an increasingly uncertain macroeconomic environment, we will continue to focus on generating cash, managing costs and return on capital employed for the rest of 2012. Our progress to date gives us confidence of achieving our 15% return on capital employed target by the end of 2013."

Half year sales for Beverage Cans rose £1,871m to £1,946m year-on-year, with underlying operating profit up from £212m to £226m, driven by good volume growth in speciality cans, better than predicted volume recovery in North America, and continued delivery of efficiencies related to down-gauging and light-weighting. The return on sales increased from 11.3% to 11.6% and the return on net assets increased from 29% to 32%.

Healthcare sales fell from £224m to £219m and underlying operating profit fell from £36m to £27m, hit by a weak flu season in North America and the impact on the pricing of one of its key devices as the drug it delivers comes off patent next year. Return on sales declined from 16.1% to 12.3% and return on net assets dropped from 43% to 29%.

Rexam increased the interim dividend per share to 5p from 4.7p.

NR