RPC cost-cutting lifts earnings above expectations

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LONDON (ShareCast) - - Revenues up 7% to £1.05bn
- Earnings ahead of consensus at 41.1p
- Final dividend of 11p

Organic growth backed up by acquisitions helped plastic packaging manufacturer RPC Group (LSE: RPC.L - news) beats earnings expectations for the full year.

Revenue swelled 7% £1.05bn, fractionally shy of consensus, but its 'Fitter for the Future (Other OTC: FRNWF - news) ' efficiency programmes led to a widening of adjusted operating margin from 9.3% to 9.7% to lift adjusted profit before tax up 12% to £89.5m.

Adjusted basic earnings per share increased 11.4% to 41.1p, well ahead of consensus forecasts of 37.9p. A final dividend of 11.0p per share makes a total for the year of 15.5p, up 4%.

Chief Executive Pim Vervaat, who took over during the period, said: "The group delivered a strong performance in an economic environment which remained subdued for most of the year, before seeing a slight improvement in the second half."

He was very pleased with the progress achieved in the implementation of RPC (NYSE: RES - news) 's 'Vision 2020' growth plan aimed at providing it with further platforms for profitable growth in the US, Asia and South East Europe.

Acquisitions, which during the period included M&H in the UK and US, and Helioplast in in Bosnia-Herzegovina, contributed 3% to revenue.

Together with the expansion of existing facilities in Pennsylvania and the recent acquisition of Ace Corporation in China, these additions have significantly increased RPC's presence outside Europe, as the group also trims its European base through Fitter for the Future through disposals and divestments of non-core and unprofitable operations.

Segmentally, the injection moulding business was strongest, contributing strong sales and profits growth.

Thermoforming sales fell due to reduced activity levels and flood at the Troyes site in France, which lost part of its French dairy business as a consequence, but the division increased profits thanks to reduced cost base from prior year restructuring activities and growth in key markets.

Blow moulding performed well with sales and adjusted operating profit ahead of last year thanks to new contracts and cost reduction measures improving profitability.

Vervaat said the new financial year has started in line with management's expectations, with further efficiencies to come and that further acquisition opportunities continued to be explored.

Shares in RPC were up 2.57% to 638.5p at 08:35 on Wednesday.


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