Underlying operating profit in the healthcare business of global packaging specialist Rexam (London / UK; www.rexam.com) fell to GBP 48m (EUR 55m) in 2012 from GBP 65m the previous year. Sales fell by 9% year-on-year to GBP 427m. The company said that efficiencies of GBP 7m, principally from the employment of lean manufacturing practices and lower energy use, were not sufficient to offset lower prescription volumes and lost animal health business. Pricing was also down and, as a result, both profit margin and return on net assets declined over the year.

Following the sale over the past year of its high barrier food packaging and personal care businesses – see Plasteurope.com of 04.09.2012 and 08.01.2013 respectively – the healthcare operation remains as Rexam’s only plastics-based packaging operation. Plastic packaging accounted for 19% of Rexam’s underlying operating profit from continuing operations in 2011. In 2012 it accounted for 13% – overall, the company reported a pre-tax profit down 12% year-on-year at GBP 354m on sales up 2% at GBP 4.31 bn.

Rexam’s healthcare business comprises packaging and devices, including drug delivery devices, metering pumps, valves as well as medical components, and retail prescription products, which includes containers and closures. It currently employs around 3,100 people at 13 plants in the US, Europe and India. The company recently raised its clean room production in La Verpillière / France, where it produces insulin pens. All other expansions at the facility near Lyon are due to be completed by the end of this year. Rexam is also in the midst of expanding its plant in Bangalore / India.

The company said that organic sales in healthcare were down 2% in 2012 and that there had been good growth in a new range of insulin pens and multi layer containers, more than offset by the weak flu season in North America in the early part of the year and the impact on the pricing of one of its key devices as the drug it delivers comes off patent in 2013. In addition, the loss of business with an animal health provider in the second half of the year contributed to the overall reduction in sales.

Graham Chipchase, Rexam’s chief executive, said: “...as previously highlighted, healthcare had a difficult year largely due to one of our customer’s products coming off patent. Following the sale of the personal care business, GBP 395m is being returned to shareholders, and we have raised the total dividend for the year by 6%. "We expect to make further progress in 2013 despite an uncertain macroeconomic environment and continued cost pressures. Further contractual gains in North America and continued growth in our European and South American beverage can businesses give us confidence we will achieve our 15% ROCE (return on capital employed) target.”

e-Service:
Rexam presentation on the financial year 2012 as a PDF document