RPC cuts costs to post profit

By Rory Harrington

- Last updated on GMT

Related tags: Packaging, Plastic, Europe

RPC Group said strict cost cutting measures were responsible for it posting a half-year profit of £8m - despite the continued economic gloom and hints of polymer price rises.

But company chief executive Ron Marsh told FoodProductionDaily.com he believed that customer de-stocking across the food, pharmaceutical and cosmetics sectors had largely run its course.

Marsh said the 10 per cent reductions made to its workforce were behind the firm’s “respectable figures”​ to the end of September. However, he said the group had seen no signs of green shoots of recovery and that keeping costs under control remained the priority in the medium term. The situation was worse in Europe as demand for food packaging showed no signs of recovery

RPC, a leading European supplier of rigid plastics, announced today that despite an 8 per cent drop in sales to £351m, its operating profit had risen 19 per cent to 19m. Its 2008 net loss of £3.1m had been turned around into an £8m profit. The company operates 43 sites across 11 countries in the blow moulding, thermoforming and injection moulding sectors.

Cost cutting

“As part of the RPC 2010 Programme, we have closed five site and two distribution businesses. Our cost reductions have been greater than the sales loss,”​ said Marsh. “In the UK, where we have more non-food operations, the situation has bottomed out. But in Europe, where are food operations are higher, it is extremely difficult to forecast what will happen next.”

The company has cut its workforce by 641 to just over 6,000. It estimated that the scale-backs would realise £16m annually.

RPC cautioned that economic conditions were still difficult as customers continued to cut back on purchases. It added there had been concern over a renewed upward price trend in polymers that had emerged earlier this year as the price of oil began to recover – although tariffs appeared to have now stabilised.

Process performance

Its injection moulding operations performed well, posting a £9m operating profit. UK volumes remained stable but overall volumes dropped due to significant de-stocking in pharmaceuticals and high-end cosmetics – with the latter still being hit by the recession.

The thermoforming division also performed well, said the company – although demand was lower for its fruit bowl products.

Other highlights in this sector included an increase in the market share of the French dairy packaging segment and growth in thermoformed coffee capsules. PET sheet sales continued to benefit from the development of new applications and there were also new business developments in oxygen barrier packaging for long shelf-life foods.

A company statement said: “The growing focus on sustainability presents opportunities for the thermoforming business, which can provide benefits in terms of weight reduction and ‘carbon footprint’. These are being exploited by the replacement of glass and cans with oxygen barrier packaging, and in the development of lightweight vending cups.”

In blow moulding, while personal care products were hit by the downturn, food volumes were resilient.

“In the UK there were signs of an improvement in demand in September, whereas in mainland Europe activity levels remained relatively low throughout the six months​,” said RPC.

Related topics: Business & Financial

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