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RPC quarterly profits surge, will work with EU on plastics waste policy
FTSE 250 plastics products manufacturer RPC Group reported a surge in third-quarter sales and said it was working with governments to reduce plastic waste.
Revenues for the three months to 31 December rose 31% year-on-year to £898m, boosted by acquisitions and organic growth. Profits both before and after exceptional items were in line with management expectations and had grown "significantly", with the organic growth rate at the end of the quarter at 2.6%.
Chief executive Pim Vervaat said: "I am pleased with the performance of the business in the third quarter. Through our focus on innovation, sustainability and operating in attractive end markets, we remain confident in continuing to grow through the cycle ahead."
The firm, a specialist in designing and engineering plastic products, added that it recognised the drive by policymakers to reduce packaging.
RPC said it would "continued to work directly with policy markers and industry bodies to best achieve these aims. The majority of the group's products are recyclable, and it is strongly placed through it its numerous innovation centres to design and develop products that are more easily recyclable.
"Overall the group is well positioned to promote behavioural change and increased recycling."
Last year, the UK Environmental Audit Committee said it would target packaging firms and supermarkets as part of a drive to "turn back the tide" on plastic waste and recycling.
Earlier this month, after receiving many questions from investors regarding EU and UK plastic recycling efforts and the impact on RPC, Deutsche Bank said it "we don't believe it has the implications that the recent sell-off in RPC shares would suggest".
"While there is a perception issue escalating around plastic, we believe that RPC has less than 1% of its revenue exposure to 'single-use' plastic packaging products (in detail, vending cups), which seems to be the main focus of the regulatory discussion. It is arguable that RPC's technical know-how will be part of the solution rather than the problem."
RPC also added that is set to benefit from changes to the federal corporate income tax rate in the US, which is being reduced from 35% to 21%. The company said it expected to receive a one-off cash tax credit of around £10m in the current year, while in the following year, the changes are expected to reduce the group's adjusted effective tax rate by approximately 1%.
Shares in RPC fell 4% to 815.8p on Thursday.