Rexam: lean and mean

Rexam, the world's largest maker of drinks cans, which counts Coca-Cola among its blue-chip customers, has bucked the bear market and looks set for further gains. The upturn comes following a series of sell-offs which have streamlined the company and improved its financial standing.

The company fell into the red in the first half of the year with a £147 million (€232m) loss. The negative result was produced by a stack of exceptional charges linked with a disposal programme as Rexam slimmed down to focus on consumer packaging.

That lengthy process is complete and Rexam, the former Bowater conglomerate, is now a very different beast. It has raised £794 million from selling non-core assets to reduce debts after the £1.5 billion acquisition two years ago of American National Can.

Strip out the £250 million of one-off charges included in the interim figures, mainly writing off goodwill on the disposals, and Rexam's results impressed. Underlying profits rose 30 per cent to £134 million as turnover grew from £1.56 billion to £1.58 billion.

The chief executive, Rolf Borjesson, put the strong growth down to the higher prices it has achieved for drinks cans in the US, up by 5 per cent in the six months to 30 June. The price recovery in the US came without a reduction in volumes and there should be more to come. Borjesson hopes for an extra 4 per cent this year and 1 per cent in 2003 on annual sales of about £1 billion.

The only real disappointment came in the plastic packaging business where demand dropped after 11 September as consumers cut purchases of pricey perfume and make-up, particularly in airport duty free shops. That led to customer destocking and delayed product launches. Rexam reckons, however, there will be some recovery in sales, profits and margins in the coming months.