Rexam posts continued recovery in can volumes

By Guy Montague-Jones

- Last updated on GMT

Related tags Rexam Better

Rexam has reported a continued improvement in beverage can volumes in H1 helped along by strong growth in demand for energy drinks.

Overall reported group sales for the first six months of the year were down slightly to £2,491m as the top line was hit by negative currency translation effects totalling £30m. More encouragingly organic sales were up 2 per cent as plastic packaging revenue remained broadly flat and beverage can sales grew 3 per cent.

Commenting on the sales performance, Rexam CEO Graham Chipchase said: “In most of our businesses, the trading environment is stabilising and the outlook for beverage cans has improved since the start of the year.”

In the beverage can business, Rexam also posted a significant improvement in underlying operating profits from £147m last year to £196m this time around.

The company said this improvement was driven by “cost reductions, better pricing, volume growth (predominantly in South America) and a better mix afforded by the growth in specialty cans.”

Specialty cans

Specialty can volumes grew substantially in all regions; volumes were up 22 per cent in Europe, 22 per cent in North America and 39 per cent in South America.

The booming market for energy drinks was a key driver for this growth in Europe, while in North America, Rexam said beer and iced teas lay behind the sales improvement.

As for South America, Rexam said: “Energy drinks… grew sharply in South America, owing to the introduction of new products, especially in Brazil, and the can’s well established presence in traditional and supermarket channels.”

Part of the reason for the substantial increase in specialty can volumes was the slump that occurred in 2009, when consumers moved away from premium cans and fewer new products were launched, resulting in a 14 per cent volume decline.


The poor financial and trading environment last year took its tool on sales and profits, prompting Rexam to impose severe cost cutting measures. This has resulted in a reduction in headcount of about 2,200 people since the start of 2009. Another 100 jobs are expected to go by the end of 2010.

Restructuring has now begun feed through into improvements in profits. In place of a £30m loss in the equivalent period last year, Rexam has reported a profit before tax of £144m for the first six months of 2010.

But despite this improvement, and the recovery on the top line, Rexam remains cautious about future performance. Chipchase said in a statement: “Uncertainty persists about the global economic outlook and visibility remains low.

However, he added: “We expect our results for the second half of the year to be similar to those of the first. We are confident that our focus on the fundamentals of cash, costs and return on capital will continue to strengthen our business and improve shareholder value.”

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