Global consumer packaging company Rexam (London / UK; www.rexam.com) achieved record profits and cash flow in the year to 31 December 2010 as a result of controlling costs, optimising cash and raising the return on capital employed. The underlying profit before tax beat earlier forecasts by improving 45% to GBP 412m (EUR 488m), although sales were up only 2% at GBP 4,962m (EUR 5,880m). Organic underlying operating profit in the rigid plastic packaging business was up 16% to GBP 119m (EUR 141m), providing a return on sales of 12.6% and a return on net assets of 29.1%. The beverage and specialty operations of the closures division that form part of plastic packaging are currently being marketed for disposal and a number of indicative offers have been made.

In future, plastic packaging will comprise both healthcare and personal care, into which the high barrier food container business that formed part of the closures division is to be consolidated. In 2010, these plastics activities accounted for 23% of Rexam’s underlying operating profit from continuing operations. Organic sales improved 4% to GBP 942m (EUR 1,116m), but this was almost entirely due to Rexam’s having passed down higher polymer costs. As part of the restructuring of the plastic packaging business, including the closures division, eight plants in the US and Europe were shut last year, resulting in a 10% reduction in headcount. The measures, delivered on time and to budget, resulted in annual savings of some GBP 34m (EUR 40m) at a total cash cost of GBP 39m (EUR 46m).

Innovation and product development will continue to be key to future growth in plastic packaging. One such launch in 2010 was the “Novelia” multi-dose eyedropper, a major innovation in ophthalmic drug delivery devices in a patient-friendly package. In personal care, further uses for the patented PP foam pump – see Plasteurope.com of 15.11.2010 – are being investigated for items such as laundry detergent and cleaning products. Sales of high barrier food containers grew 8% in 2010 and the full commercialisation of a plastic can as a replacement for metal has aroused interest in the food canning industry.

Chief executive Graham Chipchase said Rexam already derived some 30% of sales in emerging markets and expects this to increase as a result of improved capacity utilisation in Asia and continuing investment in Latin America. The restructured plastic packaging business should also reap greater benefits from improved momentum in the economy, particularly in personal care applications. The balance sheet was considerably strengthened in 2010 with costs reduced by GBP 88m (EUR 104m), free cash flow of GBP 316m (EUR 375m) and net debt reduced to GBP 1.68 bn (EUR 2.0 bn). Chipchase expects 2011 “to be a year of continued progress”.

e-Service:
Rexam’s audited results for 2010 as a PDF document