RPC signals further price increases as it navigates polymer ‘headwinds’

By Rory Harrington

- Last updated on GMT

Related tags: Revenue, Time

RPC Group said the time lag in passing on record raw material costs to its customers had hit its full year 2010 results – but that revenue has still jumped year-on-year.

The UK-based company hailed its takeover of Superfos as “strengthening”​ the firm and declared it expected the new asset to boost revenues by up to ₤25m a year.

The group yesterday predicted that 2010/11 revenue would outstrip the previous year thanks to improved volumes but also higher selling prices secured by passing on polymer price hike to its customers.

“Polymer prices have risen throughout the financial year by circa 20 per cent and reached record levels in the period January – March 2011,​” said RPC in a pre-close trading statement. “The Group is able to pass through these increases onto its customer base, albeit with a time lag which has had a significant negative impact on the full year margins.”

But the firm remained bullish in “its capability to pass through both the most recent and any future polymer price increases”.

Revenue increases had also been driven by a significant improvement in the sales mix across long shelf-life and coffee capsules, personal care and the pharmaceutical sectors. The completion of its efficiency programme had contributed too, said RPC.

Superfos acquisition

RPC gave more details of the likely effects of the acquisition of Superfos, which was completed last month for €240m.

A year-on-year increase in sales volumes of five per cent meant 2010 performance had trumped the previous year. RPC also expected its new unit to be able to pass on polymer price rises in future – thus boosting revenue further.

Cost and synergy benefits of the Superfos buyout were now expected to yield between £15m to £25m per annum from the third full year after acquisition – with at least a £5m jump expected in the current financial year.

RPC CEO Ron Marsh said he was pleased with overall performance in the face of the polymer price “headwinds”.

Margins would be enhanced as the sales mix continued to move towards higher added value products, he added

“The Superfos acquisition will further strengthen the enlarged Group as we continue the integration and benefit from the synergies that exist,” ​declared Marsh.

Related topics: Processing & Packaging

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