Plastic packaging company RPC Group PLC (LON:RPC) shares gained after saying it expects full year revenues to rise “significantly”.
Revenues were boosted by organic growth, acquisitions, higher polymer prices and foreign exchange tailwinds, the group said in a trading update on Thursday.
Profits and cash generation are expected to meet management’s estimates.
RPC said its financial position remains “robust with good cash flow development and significant headroom in its debt facilities”.
Shares rose 1.4% to 797p in morning trading.
RPC responds to campaign to cut plastic waste
The group also touched on the campaign to reduce plastic use and waste, saying it is continuing its work with its supply chain to “ensure positive outcomes for the environment”.
“Through its numerous design and innovation centres, the group continues to develop products that have minimal environmental impact and that can be easily recycled at the end of their life,” RPC said.
In an effort to cut back on waste, the government recently announced a proposal to make people pay a deposit when they buy single-use glass and plastic bottles, and steel and aluminium cans. Consumers will get the money back if they return the container under the so-called deposit return scheme.
RPC said it “looks forward to positive discussions” with the government on the full details of the scheme, which is subject to consultation and yet to be decided, including how big the deposit will be.
“The campaign to reduce plastic usage and waste has weighed on the shares in recent months – and it’s unlikely the group would escape a regulatory crackdown unscathed,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
“However, as one of the largest packaging businesses in Europe, with a focus on innovation, it’s not all bad news.
Hyett noted that plastics are relatively light weight and the ease of transportation means they remain a key weapon in fighting carbon emissions.
He believes RPC should be able to respond quickly to demand for more easily recyclable products with minimal environmental impact.
Integration of acquisitions on track
The integration of the European businesses RPC has acquired, including packaging and containers company Promens, closures and dispensing systems firm Global Closure Systems and polythene films supplier British Polythene Industries, has mostly been completed.
RPC has closed 22 locations and 300 production lines over a three-year period as part of the integration and expects to achieve an annual synergy run-rate of €105mln by the end of the financial year ending March 2019.
In March, the group also announced it would buy polythene films company Nordfolien GmBH for a consideration of €75mln. RPC said the acquisition will contribute to its future growth and deliver cost synergies.
"I am delighted with the progress the group has made in the year whilst nearing the successful completion of the European integration programme.
We look forward to further developing the business organically and remain excited by opportunities in the ongoing industry consolidation.
Last July, RPC announced a £100mln share buyback programme and on Thursday said 9.64mln shares have been repurchased for a total consideration of £83.2mln.