Reuters: Hot Stocks: UPDATE 2-RPC to gain from cost cuts, lower polymer prices; shares rise

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UPDATE 2-RPC to gain from cost cuts, lower polymer prices; shares rise Jun 5th 2013, 10:41 Wed Jun 5, 2013 6:41am EDT * FY adjusted pretax profit falls 5 pct to 76.3 mln stg * Revenue falls 7 pct to 1.05 bln stg * Shares rise nearly 8 pct (Adds CEO and analyst comment, details; updates share movement) By Karen Rebelo June 5 (Reuters) - Plastic-packaging maker RPC Group Plc said it would benefit from easing polymer prices and savings from cost- cutting, sending its shares up nearly 8 percent. RPC, which makes plastic containers, jars and bottles for brands such as Nescafe and Heinz, said polymer prices -- a key raw material for RPC -- had fallen in April and May, the first two months of the company's financial year. "It was around 1,400 euros (per metric tonne) and they've now come off cumulatively by around 150 euros, so that's sizeable," Chief Executive Pim Vervaat told Reuters. RPC had flagged in March that higher polymer prices and the euro's weakness against the pound would hit earnings. The company had said prices of polymer, a highly volatile commodity, had hit record highs in September. RPC, which generates more than three-quarters of its revenue from Europe, said full-year earnings were lower by 4 million pounds hurt by a weaker euro. The euro had been weaker for most of the past twelve months. "We believe RPC is in good shape, and has weathered the storm of pressures outside its own control well, which could now move in its favour given movements so far in the first quarter," Panmure Gordon analyst Paul Jones said in a note, and upgraded RPC's stock to "buy" from "hold." Adjusted pretax profit fell to 76.3 million pounds for the year ended March 31, from 80.3 million pounds a year earlier. Revenue decreased 7 percent to 1.05 billion pounds. RPC said it expected to save 12 million pounds ($18.4 million) annually from financial year 2015 as a result of cost cuts under its 'Fitter for Future' programme, which involves pruning its business. "We're saying we are going to achieve at least cumulative 5 million pounds in the year 2013-2014," Vervaat told Reuters. The company said demand was similar to that seen last year with the sales mix improving towards higher-value products. The company raised its final dividend to 10.6 pence per share from 10.2 pence a year earlier. RPC's shares were up about 7 percent at 427 pence at 1020 GMT on the London Stock Exchange on Wednesday. ($1 = 0.6539 British pounds) (Reporting by Karen Rebelo in Bangalore; Editing by Supriya Kurane) Link this Share this Digg this Email Reprints

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