RPC Group Plc, Europe's biggest plastics packager, has reported a 5.8% rise in quarterly revenue, helped by contributions from its Astrapak moulded-plastic packaging business and favourable polymer pricing.
The company said that revenue rose to £964.7 million in the quarter ended 30 June.
'Profitability (before and after adjusting items) from continuing operations was in line with management expectations and grew versus last year,' the company noted.
It noted that cash flow development was 'also in line with expectations' and that the company will 'continue to benefit from the returns on previous capital investments as the projects start to come on stream'.
Commenting on its performance, RPC chairman Jamie Pike said, "The board strongly believes in the strengths and prospects of the group. However, pressure on the company's market valuation and differing investor views on the appropriate level of leverage is constraining the group's ability to pursue some attractive opportunities for growth, and your board is working to resolve this. In the short term, the group will prioritise cash generation and the announced disposal of our non-core businesses, with a view to generating increased capital for deployment in the business or further returns to shareholders."
'Unusual' Statement
Commenting on the group's announcement, Russ Mould, investment director at AJ Bell, said that the statement was "unusual", in that it seemed to indicate that RPC has "effectively pressed pause on its growth ambitions".
Mould said, "The company has relied heavily on acquisitions to expand in recent years, but now chairman Jamie Pike admits a falling market value and 'differing investor views' are constraining its ability to 'pursue some attractive opportunities for growth'."
He added that the implication seems to be that "the company cannot raise funds in the equity markets because its share price has been weak for much of the year and it is fearful of taking on more debt to fund M&A.
"Perhaps, in the long run, a more disciplined approach, focused on cash generation and the disposal of non-core businesses to provide funds for investment, could be the more prudent path, even if it is one the company has been boxed into, rather than chosen for itself," added Mould.
News by Reuters, edited by ESM. Additional reporting by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
