Rexam: 1H 2006 profit down 3% on higher costs

Rexam PLC said 24 August 2006 that its first-half underlying profit fell 3% as a result of rising input costs but said it will make progress in the 2H 2006.
Rexam, one of the world“s largest glass a…

Rexam PLC said 24 August 2006 that its first-half underlying profit fell 3% as a result of rising input costs but said it will make progress in the 2H 2006. Rexam, one of the world“s largest glass and plastic bottle makers, said trading remains in line “despite the challenging cost climate our industry is facing”. The company expects to make progress in the 2H 2006 and will focus on margins management through pricing and cost efficiencies. The company“s underlying pretax profit in the six months to 30 June 2006 was GBP 137 million, down from GBP 141 million for the 1H 2005. Sales grew 20% to GBP 1.8 billion compared with GBP 1.5 billion for the same period 2005. Glass sales rose 7% in the 1H 2006 through a combination of successful price increases, higher volumes and improvements to the mix, Rexam said. Demand for glass remains good and the industry in Europe is now in better balance than for a number of years. However, the increased sales were not enough to offset the GBP 11 million rise in energy costs and, as a result, operating profit was lower than the equivalent period in 2005. Sales growth was concentrated in increased volumes for wine and spirits bottles and better pricing in other beverage containers. Sales to food markets are weighted towards the second half of the year in line with European harvests. Following the announcement on 20 August 2006 that the company was making its move into India with two acquisitions and an investment of GBP 7 million, Rexam said it would strengthen the business through organic and acquisitive growth.