RPC, the rigid plastics packaging group, is optimistic about future sales potential although it continues to fight rising input costs.
In a trading statement today (28 September), the group said its operating profit before exceptional items for the first half of 2007 would be similar to last year's £18.4m, despite continued pressure from higher raw material costs.
RPC chief executive Ron Marsh said the group was "hanging on in there with maintained profits", although this was "not what we want to achieve in the long run".
"Even where we pass on 100% of increases we don't pass them on on day one, and it affects the margins anyway," he said.
However, Marsh pointed to sales growth in several major contracts, including the production of Kraft's Tassimo coffee discs.
RPC makes all the discs for the brand, as well as for Nestlé rival Dolce Gusto, and has been buoyed by an agreement in the US for Starbucks-branded Tassimo.
The firm is also producing the new plastic packaging for Heinz Baked Beanz.
"Wherever there's innovation we are well placed to lead it," said Marsh.
However, he said sales to the UK surface coatings market had been affected by the wet weather this summer.
Consultation continues over the closure of RPC's Thornaby and Hereford plants and the group expects exceptional costs to be higher than in the first half of 2006.
Finance charges will also be higher because of an increase in borrowings and in interest rates on the unhedged portion of RPC's bank debt.
Marsh bemoaned the continuing "huge and damaging" disparity between polymer costs for the European market and the rest of the world.
And he said raw materials suppliers had "taken advantage" of record oil prices to raise their prices.
"While spot prices for polypropylene and polyethylene have come down slightly, contract prices have gone up," he added.
However, respite could be on the way in the next couple of years if supply from new polymer production capacity in the Middle East leads to a decrease in prices.
Source: packagingnews
In a trading statement today (28 September), the group said its operating profit before exceptional items for the first half of 2007 would be similar to last year's £18.4m, despite continued pressure from higher raw material costs.
RPC chief executive Ron Marsh said the group was "hanging on in there with maintained profits", although this was "not what we want to achieve in the long run".
"Even where we pass on 100% of increases we don't pass them on on day one, and it affects the margins anyway," he said.
However, Marsh pointed to sales growth in several major contracts, including the production of Kraft's Tassimo coffee discs.
RPC makes all the discs for the brand, as well as for Nestlé rival Dolce Gusto, and has been buoyed by an agreement in the US for Starbucks-branded Tassimo.
The firm is also producing the new plastic packaging for Heinz Baked Beanz.
"Wherever there's innovation we are well placed to lead it," said Marsh.
However, he said sales to the UK surface coatings market had been affected by the wet weather this summer.
Consultation continues over the closure of RPC's Thornaby and Hereford plants and the group expects exceptional costs to be higher than in the first half of 2006.
Finance charges will also be higher because of an increase in borrowings and in interest rates on the unhedged portion of RPC's bank debt.
Marsh bemoaned the continuing "huge and damaging" disparity between polymer costs for the European market and the rest of the world.
And he said raw materials suppliers had "taken advantage" of record oil prices to raise their prices.
"While spot prices for polypropylene and polyethylene have come down slightly, contract prices have gone up," he added.
However, respite could be on the way in the next couple of years if supply from new polymer production capacity in the Middle East leads to a decrease in prices.
Source: packagingnews
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