Neil DennisPackaging specialist RPC Group reported record first-half profits on Wednesday driven by combined organic growth and contributions from acquisitions.
The company also benefitted from currency movements that acted in its favour to report a 58% increase in first-half adjusted operating profit to £214.7m.
Despite some impressive gains that beat market expectations, the shares were highly volatile in morning trade on the FTSE 250.
Half-year highlights
- Revenue growth of 53% to £1,876m reflecting the contribution from acquisitions, organic growth, polymer price tailwinds and translation benefits from foreign exchange movements
- Adjusted operating profit increase of 58% to £214.7m with adjusted EPS up 27% to 36.4p
- Return on sales increase of 30 basis points to 11.4%
- Statutory net cash from operating activities increase of 62% to £245.4m, and free cash flow up 45% to £171.7m
- Interim dividend of 7.8p up 28% representing the 25th year of consecutive growth
- More than 20% of revenues now generated outside of Europe
- Healthy innovation pipeline; one additional innovation centre added taking the total to 32 worldwide
- Share buyback scheme implemented to deliver further shareholder value; £12.4m of capital deployed in the period
CEO comment
Pim Vervaat, chief executive (left), said: "Trading was encouraging in the first half with record profitability levels and strong cash generation.
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"Looking forward, the group continues to target innovation-based growth leveraging its global footprint and will participate in the ongoing consolidation of the plastic packaging markets, albeit with no significant acquisitions anticipated in the remainder of this financial year."
Market reaction
Markets were unsure of how to take the results. The shares rallied 7% initially to an intraday high of £10.32 before turning negative. By late morning in London, the shares were down 5.18% to 914.5p.
