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Positive Points: Management continued to express confidence that initiatives to improve group efficiency and increase shareholder returns would be achieved. The group continued to drive operational excellence and delivered efficiencies of £11 million from continuing operations during the period. Growth in the Emerging Markets continues to be targeted. More than 30% of the company's revenues came from Emerging Markets. Rexam is the leading beverage can manufacturer in three out of the four BRIC countries. Cash from the sale of its Personal Care business is being returned to shareholders. As already announced, Rexam intends to return around £370 million of the proceeds to shareholders following completion of the disposal by way of a redeemable B share scheme, together with a share consolidation, a structure that gives shareholders flexibility in terms of tax treatment. Group net borrowings stood at £1.352 billion as of the half year end, down from the £1.62 billion recorded as of H1 2011. A progressive dividend policy continues to be pursued. The interim dividend was increased by 6% to 5 pence.
Negative Points: The results came in at the lower end of analyst expectations. Management highlighted a "challenging trading environment." During the period, organic sales for its Healthcare business fell by 1%. Divisional operating profit, as anticipated by management, was down due to the pricing impact of a drug patent expiration and further impacted by lower prescription and primary packaging volumes - underlying operating profit declined from £36 million to £27 million. For the second half, Healthcare profitability is expected to be at a similar level to that of the first. The group’s decision to market the Personal Care business for disposal required its carrying value to be subject to an impairment review. This review gave rise to an impairment charge before tax of £181 million on the Cosmetics, Toiletries and Household Care products business. The loss of a major customer contract could have implications. Rexam’s top 10 beverage can customers accounted for over 70% of sales. Volatility in the price of key raw materials including aluminium and plastics resins may provide headwinds in its core beverage business. Rexam is subject to foreign exchange movements
Financial Highlights: Total Beverage Cans volumes up 6%. Adjusted profit before tax up by 1% to £207 million. Statutory total loss for the period of £52 million against a profit of £132 million for H1 2011. Beverage Can organic operating profit up 9%. Proposed sale of Personal Care business for £452 million previously agreed with £370 million to be returned to shareholders. Interim dividend increased by 6% to 5 pence
Half year results: While group restructuring remains ongoing, interim results materialised at the lower end of analyst estimates. Sales from continuing operations rose by 3% to 2.17 billion pounds, with underlying or adjusted pre-tax profit up by 1%. Management changes to improve efficiency and increase shareholder returns remained ongoing over the period with the proposed sale of its Personal Care business for a total of 452 million pounds announced. The business is being sold in two parts: the Cosmetics, Toiletries and Household Care products business (CTH) and the High Barrier Food packaging business (HBF). In all, despite a challenging trading backdrop, management remained confident that self help initiatives could be achieved,
Rexam is a leading global consumer packaging company. It is one of the leading global beverage can makers and a major global player in rigid plastic packaging. Products range from drink cans, lipstick cases, dispensing systems for perfumes and lotions, plastic containers and closures to intricate delivery systems for asthma inhalers. Major customers include Anheuser-Busch, Carlsberg, Coca-Cola, Estee Lauder, Heineken, Interbrew, L'Oreal, and LVMH. For its continuing operations, the company has close to 100 plants in more than 20 countries and employs around 19,000 people.
Commenting, Graham Chipchase, Rexam's chief executive, said: "We are encouraged by the progress of the continuing business in the first half and, in spite of a challenging trading environment, our overall performance was in line with our expectations. Beverage Cans traded well with the global growth of specialty cans and the performance of the North American business overcoming cost headwinds. As indicated previously, we had some specific challenges in Healthcare. We are pleased to have announced the proposed sale of the Personal Care business and our intention to return around £370m to shareholders once the transactions are completed. In an increasingly uncertain macroeconomic environment, we will continue to focus on generating cash, managing costs and return on capital employed for the rest of 2012. Our progress to date gives us confidence of achieving our 15% return on capital employed target by the end of 2013."
Highlights · Total beverage cans volumes up 6% · Underlying profit before tax2 (including Personal Care) £225m · Beverage Cans organic3 operating profit up 9% · Healthcare underlying1operating profit down from £36m to £27m · Proposed sale of Personal Care business for $709m (£452m)4 announced in early July with c £370m to be returned to shareholders · Return on capital employed (ROCE) on track for 15% by end of 2013 · Interim dividend 5p up 6%
http://www.investegate.co.uk/Article.aspx?id=201208010700079852I
Following the completion of the sales, Rexam plans to return around £370m (at current exchange rates) to shareholders which it is anticipated will be effected by way of a redeemable B share scheme together with a share consolidation.
As a result of the sale, Rexam will carry out a restructuring programme to remove residual overheads which, together with certain separation costs, will result in exceptional charge of some £40m in 2012, of which £25m will be cash costs. Going forward, there will be £7.0m of annual retained fixed costs which will be absorbed by the Beverage Cans and Healthcare businesses. In total, the Personal Care business employs some 7,000 people in Europe, the US and Asia. In 2011, the business had sales of £502m and underlying operating profit of £38m before central overheads (CTH: £26m and HBF: £12m). As at 31 December 2011, it had gross assets of £650m (CTH: £611m and HBF: £39m) and liabilities of £112m (CTH: £103m and HBF: £9.0m). It is expected that there will be an impairment charge of some £200m at the half year arising from the sale of CTH, which will be broadly offset in the second half by a gain on the sale of HBF, associated foreign exchange gains and tax credits.
Rexam, the global consumer packing company, is proposing to sell its Personal Care business in two parts and return the majority of the proceeds to its shareholders. The Cosmetics, Toiletries and Household care products unit (CTH) and the High Barrier Food packaging division (HBF) will be sold for a combined total of $709m in cash (£452m at current exchange rates). A binding offer of $459m has been recieved from an affiliate of Sun Capital Partners for CTH, while a subsidiary of Silgan Holdings has agreed to acquire HBF for $250m, also in cash. The transactions are expected to complete in the third quarter of 2012 for HBF and the fourth quarter of 2012 for CTH and are conditional on certain regulatory approvals.
06 June 2012 Deutsche bank initiates coverage of Rexam with a Buy recommendation, setting a price target of 480.00 18 June 2012 Credit Suisse retains its Outperform rating on Rexam with a price target of 480.00 26 June 2012 Goldman Sachs retains its Neutral rating on Rexam with a price target of 500.00 Source: http://sharedealing.nandp.co.uk/broker-views/REX/REXAM P.S. Here's a couple of links about SCLP, one of the hottest stocks at the moment: http://www.euroinvestor.com/community/discussionthread.aspx?threadid=252803 http://www.euroinvestor.com/community/discussionthread.aspx?threadid=253089
AMERICANS TARGET BRITISH BUSINESSES As well as being the world's biggest can-maker for food and drinks, Rexam also supplies plastic packaging to the health-care, pharmaceutical, personal care, and household care markets. When I last reviewed Rexam's results in February 2011, I gave this dull company a big thumbs-up. With a market value of 3.6 billion pounds, I believe this FTSE 100 firm would be an ideal meal for Berkshire Hathaway, investing genius Warren Buffett's conglomerate. Buffett loves market leaders in boring businesses (he has bought brick, carpet, and roofing companies), so I'm certain Rexam would be an ideal piece to add to Buffett's jigsaw. Source: http://www.dailyfinance.com/2012/06/21/americans-target-british-businesses/
Consumer packaging company Rexam saw underlying profits growth race ahead of sluggish sales growth on the back of a better than expected performance in its Beverage Cans business, primarily in Europe. Underlying profit before tax rose 15% in 2011 to £450m from £390m in 2010, ahead of market expectations of £443m. Sales edged up 2% to £4,734m from £4,619m in 2010; the median forecast from the range of analysts covering the stock was for sales of £4,716m.
Galvan Research has given packaging company Rexam a buy rating, saying that the FTSE 100 firm is a “canny investment”. Galvan says that a combination of factors - including an upbeat 2012 outlook, a decent charting picture and the possibility that the underperforming Personal Care division could be divested – mark the shares out as a buy.
http://www.investegate.co.uk/Article.aspx?id=201111011518592877R
Rexam H1 profit jumps on strong beverage can demand Date: Wednesday 03 Aug 2011 LONDON (ShareCast) - The world’s largest beverage can maker Rexam reported sparkling first half profits as better than expected demand for beverage cans in Europe offset the weakness in its plastic packaging unit. For the first-half of the year, total sales were flat at £2.49bn. For the period, organic operating profit for the beverage can segment rose 12%, whereas operating profit for the plastic packaging business fell 2%. Rexam said it is “taking action to address the underperformance of plastic packaging as a whole” by negotiating price increases with customers to offset the impact of higher resin costs and closing underperforming units. The company had previously announced the sale of its closure business for $360m. “Looking ahead, we will concentrate on return on capital, costs and cash generation and expect continued good performance for the rest of the year," Rexam said in its statement. Shares of the company rose 5.7% to 374.1p in morning trading in London.
Commenting, Graham Chipchase, Rexam's chief executive, said: "We are pleased with the continued progress of the business in the first half. Beverage Cans traded better than expected driven primarily by our business in Europe. The mixed performance in Plastic Packaging continues to be a challenge in some areas and we are focused on improving the results in this business. Looking ahead, we will concentrate on return on capital, costs and cash generation and expect continued good performance for the rest of the year."
Highlights • Underlying profit before tax £236m - up 19% • Good free cash flow of £95m - net debt reduced to £1.6bn • Return on capital employed (ROCE) improved to 13.2% • Beverage Cans organic2 operating profit up 12% • Plastic Packaging3 organic2 operating profit down 2% • Sale of Closures business agreed for $360m • Interim dividend 4.7p - up 18%
http://www.investegate.co.uk/Article.aspx?id=201108030700116194L
Rexam agrees to sell Closures for $360m Rexam PLC, the global consumer packaging company, announces that it has agreed to sell its beverage and speciality closures business ("Closures") to Berry Plastics for $360m in cash, subject to certain asset adjustments. Completion is expected in Q3 2011 and is conditional on regulatory approvals. The Closures business employs about 1,500 people and is focused on the North American market. In 2010, the business was reported as discontinued with sales of £343m and underlying operating profit of £22m (loss before tax of £177m including exceptional and other items). As at 31 December 2010 it had gross assets of £280m and liabilities of £50m. Rexam plans to right-size its Plastic Packaging operations as a result of this transaction. This is expected to give rise to an exceptional charge of around £25m, of which £15m will be cash costs. The net proceeds will be used to reduce net debt. Over the past two years the Company has bought back some €62m of its €700m 2013 medium term notes and may continue to make further repurchases of these notes and other senior bonds going forward.
http://www.investegate.co.uk/Article.aspx?id=201106200732497154I
Latest offering today on iii: http://www.iii.co.uk/tv/episode/rexam-rex
Rexam, maker of cans and plastic packaging for anyone from Coca-Cola and Heineken to US consumer products manufacturers such as Procter & Gamble, wants to achieve a return on capital employed of between 12% and 15% over the next three years. For 2010, the figure achieved was 12.3%. Rexam shares are on about 11 times this year’s earnings and should have further to go in the long term, says the Times.
Mixed bag for Rexam Date: Thursday 05 May 2011 LONDON (ShareCast) - Consumer packaging outfit Rexam said overall performance in 2011 has been “comfortably in line” with its plans, though it sounded a note of caution on prospects for the Plastic Packaging division. Performance of the Beverage Cans division has been “somewhat better” than expected, the group said. European volumes grew in both standard and speciality cans, with improved volumes in Russia. Standard can volumes in North America were lower, but this was expected, and speciality cans continued to grow strongly. The North American business is on track to deliver underlying operating profit in 2011 comparable with 2010. The business in South America continues to grow strongly and the investment plans to increase capacity in the region, including the new Brazilian plant announced last month, are on track and within budget. In Plastic Packaging, the group saw good volume and pricing in Healthcare especially in Prescription Packaging. In Personal Care, good growth in the High Barrier Food container business was more than offset by weakness in Home and Personal Care and Make Up due to soft volumes and input cost inflation. Softer markets have prompted management to adopt a more cautious on the trading outlook for Plastic Packaging. "Trading so far this year has been encouraging, and overall performance is comfortably in line with our plans. However, it is still early in the year and the traditionally busy summer season will influence our full year results,” said Graham Chipchase, Rexam's chief executive. ---