Rexam plans personal care business sale
EUROPE’S largest drinks can maker Rexam put its underperforming personal care business up for sale yesterday and said it would look to return cash to shareholders, sending its shares to their highest level in nearly four years.
The British firm, which also reported full-year profits largely in line with expectations yesterday, said strength in its core beverage cans business offset continued weakness at plastic packaging, which includes the personal care and healthcare operations.
Rexam, which makes Red Bull and PepsiCo cans as well as packaging for food, healthcare and cosmetic products, said it had decided to hive off the underperforming personal care unit as it did not expect a turnaround in the near term. The unit has been hit by rising costs and lower volumes.
The firm plans, however, to retain the healthcare unit.
Chief executive Graham Chipchase declined to say how much the business could be sold for, or give a timeframe. Analysts have said the personal care unit could fetch up to £350m.
Full-year operating profit at the company’s plastic packaging unit was down 14 per cent at £102m, with the business accounting for 19 per cent of group underlying operating profit, down from 23 per cent the year before.
Full-year pre-tax profit rose 15 per cent to £450m, in line with a consensus forecast of £447m, according to a company-supplied poll.
The rise was driven by a 14 per cent jump in underlying operating profit at Rexam’s beverage cans unit, which now accounts for 81 per cent of group profit.
Shares in Rexam climbed 7.4 per cent to 413p, their highest levels since May 2008, and were the top percentage risers on the FTSE 100.