Robinson earnings 'well behind' prior year as resin prices rise

(Sharecast News) - Custom packaging manufacturer Robinson warned on Thursday that year-to-date earnings were "well behind" those achieved at the same time in 2020, with margins contracting due to the volatility created by sharp increases in resin prices, together with some lack of availability.
Robinson highlighted that since 1 January, the market price of resins used in the group had increased by an average of 60% as a result of "numerous force majeure declarations" by resin producers in the first quarter and a lack of a meaningful increase in imports into Europe, due to large-scale, weather-related disruptions in the US and shipping container shortages from Asia.

However, the AIM-listed group stated that although some convertors had been forced to shut down production lines, it was successful in mitigating "the substantial challenge" of securing resin supply to continue operations.

While group sales in the first five months of the year were 17% ahead of the same period in 2020, that figure dropped to just 2% when excluding the impact of the recently acquired Schela Plast business.

"After adjusting for price changes, sales volumes in the underlying business are 1% higher than 2020, which included additional demand due to the Covid-19 pandemic. As a result of the short-term transitional impact of resin price increases on our group, earnings for the year to date are well behind that achieved in the same period in 2020," said Robinson chairman Alan Raleigh.

Net debt almost doubled between 31 December to 31 May, up from £6.6m to £13.1m as a result of the Schela Blast acquisition.

Looking forward, Raleigh said: "Raw material shortages and price increases will continue to have a short-term impact on earnings in the first half of 2021. Whilst many of our customers have been supportive, accepting price increases outside of contractual resin escalators, the impact is not sufficient to offset the lag effect of additional material costs in the first half."

As of 0900 BST, Robinson shares were down 16.07% at 117.50p.