UK: Recession sees Rexam report H1 loss
Rexam, the drinks can maker, has reported a loss for the first half of 2009 and warned that it sees no upturn in trading for the rest of the year.
Net losses for the six months to 30 June were GBP15m (US$24.5m), compared to profits of GBP97m in the same period of 2008, said the UK-based packaging group today (29 July). Underlying net profits, before one-off charges, fell 15% to GBP135m.
Favourable exchange rates saw net sales rise by 15% to GBP2.5bn, but like-for-like sales fell by 6%, said the group, which today announced a plan to raise GBP350m in order to avoid losing its investment grade credit rating.
Rexam CEO Leslie Van de Walle said he saw "no upturn in trading conditions through the rest of 2009".
He added: "Rexam continues to deliver a relatively resilient operational performance against a very challenging backdrop."
Plans to offer a 2009 dividend to shareholders have been withdrawn, while capital expenditure for 2009 has been cut by GBP50m, to GBP200m, compared to initial guidance, the firm said.
Proceeds from the rights issue will be used to pay down debt. "Destocking has given way to reduced underlying customer demand reducing the group's ability to generate cash and pay down debt," said Rexam.
In beverage cans, the bulk of Rexam's business, like-for-like sales fell by 1% in the first half, with operating profits down 9%, as higher prices failed to offset volume sales declines in North America and Europe.
Volume sales fell by 5% in North America, although the drinks can market "stabilised to a more normal long-term trend of around a 3% decline", said the group, which has reduced capacity in the region by 15% over the last year.
The firm added that it has plans to reduce can capacity by 7% in Europe, following a 10% drop in volume sales during the half-year, largely caused by a 32% drop in demand for standard cans in Russia.
Plastic packaging has been the division worst hit by recession, Rexam said, with like-for-like sales down 18% for the six months.
Plant closures and job cuts across the business, particularly in the US, are expected to yield annual cost savings of GBP75m from 2010.
Rexam said it remained confident on paying down debt. "Against a difficult credit environment Rexam has been successfully refinancing its banking facilities in advance of them falling due; in total, some GBP1.3bn was refinanced in the first half of 2009. In the first quarter of 2009, Rexam secured GBP453m of bilateral facilities to underpin its access to liquidity."
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