UK: Rexam trading on target

Rexam has said that its underlying trading for the second half of the year is anticipated to be broadly in line with the management's expectations.

In a statement, the packaging group said its beverage cans division is performing well, driven by strong volume growth in Europe and South America, with good pricing and improved mix in Europe.

"Volume growth in Brazil has been mitigated by the Brazilian Real which has strengthened against the US dollar by approximately 10% in the second half, which increased local currency costs on translation. The North American business is recovering from the effects of the strike in the first half. Our growth capex programme is well on track, despite start up delays in our new end manufacturing plant in Manaus, Brazil," the statement said.

Meanwhile plastic packaging is seeing a continuation of the trends experienced in the first half, the company said.

"In the second half, the US dollar has continued to weaken against sterling, and this will affect our reported results due to the translation impact on our US dollar earnings. In addition, energy and freight costs have been affected by the higher price of oil and this is expected to continue into 2008," the statement said.

It continued: "The integration of O-I Plastics, acquired in July 2007, is proceeding well and is set to deliver the expected synergies from 2008 onwards. However, the 2007 operating profit for O-I Plastics will be affected by an estimated additional £5m fair value inventory accounting charge arising on acquisition."

Rexam will announce its preliminary results for the full year on 20 February 2008.