Results for the Group are in line with our plans. Both Beverage Cans and Plastic Packaging are performing as expected and the execution of our cost reduction initiatives remains on track.
In Beverage Cans, volume growth in Europe was driven by specialty cans, although as expected the growth rate in the period was somewhat slower than in the first half due to stronger prior year comparators. In North America, specialty cans made good progress, while the business in South America continued to grow strongly.
Our Beverage Can North America customer contract negotiations are progressing well. We are increasingly confident that overall operating profit in Beverage Can North America in 2011 will be comparable to that in 2010 as improved pricing, new customer volumes and continued growth in specialty cans will offset the impact of lower net 12oz volumes.
In Plastic Packaging, volumes in Personal Care continue to recover, Healthcare volumes are up versus last year, but demand for Closures remains soft. The restructuring programme in Plastic Packaging is on schedule and nearing completion, and the leaner cost base will benefit results going forward.
We remain focused on cash, cost and return on capital. We will continue to invest in additional capacity to meet the strong demand for beverage cans in South America and specialty cans in North America, while keeping overall capital expenditure under tight control. We will increase our capacity in Brazil by a further 1.7bn cans by building a second can line to produce 800m cans in our Pouso Alegre plant and speeding up lines in our Jacarei and Recife plants which together will increase capacity by 900m cans. As a result of these and other previously announced projects, our total installed capacity in South America will increase from 11bn in 2009 to 14bn cans by 2012. In North America, we will increase our 24oz capacity by 400m cans, or 13% by 2012.
Our balance sheet has been further strengthened: net debt at September 2010 was £1.7 billion, and net debt/EBITDA on a reported basis was 2.2x (Q3 2009: 2.9x).
Graham Chipchase, Rexam’s Chief Executive said:
“Trading for the period has been in line with our expectations and the execution of our cost reduction initiatives is on track. The contract negotiations in North America are progressing well. We are investing in carefully selected, high return projects in emerging markets and higher growth segments that will improve our overall growth prospects while keeping capital expenditure under tight control. We continue to expect our results in the second half of 2010 to be similar to those of the first and remain focused on cash, cost and return on capital to ensure our business is in good shape going into 2011.”
Graham Chipchase, Chief Executive +44 20 7227 4100
David Robbie, Finance Director Sandra Moura, Head of Investor Relations Financial Dynamics Richard Mountain +44 20 7269 7291
Rexam will host a conference call for investors and analysts on 16 November at 08:00 (UK time).
Participants dial-in number: +44 (0) 20 3140 0724
A replay service will be available until 15 December, 2010
UK Toll Access Number: +44 (0)20 3140 0698 UK Toll Free Number: 0800 368 1890 US Toll Free Number: +1 877 846 3918 Conference Reference: 374935#