Materials costs and strike action tear into Rexam profits

Aluminium costs and a four-week strike in the US have cut Rexam's profits for the first half of the year by more than a third.

Despite a 3% increase in sales, the plastic packaging and can maker recorded a 37% drop in pre-tax profits to £97m compared with the first six months of 2006.

But chairman Rolf Börjesson said the results published today (July 31) were in line with expectations, and that the company was "confident" of future growth.

"The first half [of the year] was every bit as challenging as expected, with lower results masking significant progress in other areas," he added.

In beverage cans, sales increased across the company, with the exception of the US, where volumes declined by 10%. The company attributed this fall in part to the strikes at nine of its North American plants in May, which cost it £15m, but maintains that trading is now "back on track".

Sales of plastic packaging increased by 3%, and the £898m ($1.825bn) purchase of O-I Plastics announced in June is due to be completed on July 31.

In the past six months, Rexam has further consolidated its activities with the sale of its glass operations and the recent announcement of the acquisition of Russian can maker Rostar.

Since trading started today, Rexam's share price has risen by 3%, and remains at the same level as twelve months ago.
Source: packagingnews