9th June 2015
As plastic packaging group RPC reports its full year results, Ian Forrest, investment research analyst at The Share Centre, explains why he is backing the group’s shares…
This morning plastic packaging group RPC announced full-year results that were ahead of market expectations, and trading in its new financial year is on track. Revenues for the year to March rose 17% to £1.2bn, while adjusted pre-tax profits were up 33% to £119m. Investors will be pleased that the company maintained its strong long term track record on dividends, with a further 12% rise in overall payments for the year.
Better still was news that the recent £307m acquisition of European plastic packaging group Promens is now expected to yield annual cost synergies of €30m, which is double the initial estimate. Such acquisitions are already making a contribution and have helped to diversify the group’s customer base and widen its exposure to different markets around the world.
These are a good set of results from RPC showing healthy sales and profit growth, despite headwinds from adverse currency movements and higher polymer prices. Due to the company making progress with its strategy of moving into the fast-growing markets, streamlining its European operations and maintaining a strong dividend policy, we recommend RPC as a ‘buy’ for medium risk investors seeking a balance of income and growth.