Rexam optimistic despite Euro beverage can blow
In a trading statement for the fiscal quarter ending 31 March this year, the packager said that a focus on improving capital expenditure in its operations had helped to reduce overall debt to £2.7bn (€3bn).
The group said it remains optimistic for both its plastic and beverage can operations, despite market weakness resulting from the economic downturn leading it to restructure certain operations.
Beverage cans
Rexam claimed in the statement that its overall beverage can operations were holding up ‘reasonably well’ amidst general economic uncertainty, altohugh market declines were posted for the segment in both Western and Eastern Europe.
The company suggested that a particular decline for canned drink packs in Russia reflected wider market trends, though claimed similar market declines seen in the US during 2008 had eased in the first quarter. Rexam said its South American operations had posted robust earnings over the three month period, hampered slightly by a weaker Brazilian Real.
“In our cans business globally, we have reduced inventory levels in the first quarter to meet market demand and optimize cash flow, although this has resulted in some curtailment costs,” stated the company. “We expect the second half of 2009 to improve on the first half as we head into the traditionally busier summer season.”
Plastics
In the group’s plastic packaging operations, Rexam said the segment was in line with expectations after being hit over the period by customer destocking and the economic downturn.
In a bid to reduced fixed costs linked to plastic pack production, the company claimed it was targeting restructuring for the segment with a focus on cost reduction.
“The exceptional restructuring charge in 2009 will be around £40m (€44.5m), of which £35m (€38.9m) will be cash costs, with expected annualised savings of £30m (€33.4m) from 2010 onwards,” stated Rexam.
Leslie Van de Walle, chief executive officer for the company, said that with operating profit ‘broadly’ expected to be in line with earnings from the previous year, refinancing of a £775m (€862.8m) revolving credit scheme by November 2010 was expected to occur as planned.
“In the shorter term, the full extent to which the economic downturn will affect our trading in 2009 remains unclear,” stated de Walle. “But we will continue to focus on generating cash and reducing costs by proactively managing the variables over which we do have control."
