Rexam mulls options for future of closures business

A spokesperson for the company said Rexam is “examining options” ​for its beverage and specialty closures businesses, including a possible sale and further restructuring.

Investors greeted the news positively as shares in the company rose by almost 4 per cent in London trading yesterday.

Bofa-Merrill Lynch analyst Ross Gilardi said that getting out of closures could be good news for Rexam if it is offered a reasonable price. “Rexam would free itself of the weakest link in its plastics portfolio,” ​said the analyst in a note to investors.

“Enduring weakness”​​

Rexam has identified closures, especially beverage closures, as a weak spot in its portfolio in recent trading statements. In its full year statement 2009, the UK-based company referred to the “enduring weakness in beverage closures”.​

And in its half year trading update this summer, it said: “In closures, performance continued to be disappointing. Although sales increased owing to resin pass through, volumes decreased 9 per cent with the continued decline in the demand for beverage closures.”​

One positive point in the business segment is high barrier food containers, which Rexam said returned to growth in the first half of 2010. A spokesperson for Rexam said these products are not included in the review on its future in closures.

Closures are part of the plastics packaging business at Rexam, which also includes a personal care and healthcare segment. The division as a whole experienced 6 per cent organic growth to £667m in H1 this year despite continued volume reductions in beverage closures. The closures business accounts for about a third of turnover from the plastic packaging division.

Rexam has already implemented a restructuring programme of its closures unit that is now nearing completion. This has resulted in job cuts and the closure of one plant in North Carolina and another in Michigan.