RPC Group Sets Out Final Phase Of Restructuring, Strategy Overhaul

LONDON (Alliance News) - Plastic packaging supplier RPC Group PLC Tuesday unveiled the final part of its restructuring and strategy programme, pledging to continue growing organically, make some acquisitions in the still fragmented plastic packaging market in Europe and to establish a "meaningful" presence outside Europe over the next few years, as well as selling some parts of its existing business.

It also set out the targets by which it will measure its performance. It is targeting a minimum 20% return on net operating assets, an adjusted return on sales of at least 8%, and a progressive dividend policy targeting 2.5x cover. It said it will continue to target return on capital employed of 20% for its existing businesses.

In a statement ahead of the company's Capital Markets Day, RPC said it had also identified a number of efficiency targets during its review. It plans to shut one of its Swedish manufacturing plants, consolidating production at the Mullsjo facility, and shut down the Troyes factory in France that was hit by floods in May.

Additionally, it will cut costs by making savings on overheads and refocusing its Spanish blow moulding operations.

It will sell its Cobelplast group of sheet businesses, as well as Offenburg, a disposables stockist. The combined revenues of these businesses were GBP82 million in the last financial year, but they made an operating loss of GBP1 million.

The final phase of restructuring will cost GBP40 million, including writedowns of the businesses to be sold. It thinks the a full annual benefit of GBP7 million a year will be realised in the 2016/17 financial year one the revamp completes in the year ending March 2016.

RPC said it would provide a trading update November 28.

RPC shares were up 2.2% at 518.50 pence early Tuesday, one of the biggest gains on the FTSE 250.

By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1

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