RPC predicts 2010 profit boost thanks to cost cutting

Rigid packaging group RPC says it expects 2009/2010 operating profit to be ahead of the previous year, despite a drop in revenue and volume sales, thanks to lower costs and an improvement in margins.

The company’s restructuring programme, due to end this year, includes redundancies at its Marolles plant, which manufactures packaging for the cosmetics industry in France. The programme also included closing five plants in 2009 and selling the Halfweg site in the Netherlands for £3m.

The plastics giant was forced to initiate the cost-cutting measures because of the economic recession, and says reduced volumes will mean that sales will be lower than the £769.1m recorded the previous year.

The company also says that polymer prices are rising: "The continued trend of increasing polymer prices has brought some polymers near to the peak levels witnessed in the summer of 2009. Pass through mechanisms are however in place with the majority of our customers."

Some sectors showed signs of improving during the second half of 2009, although activity levels were not much higher than the first half of the year.

Last month, RPC said revenue in its third quarter (1 October – 31 December 2009) was down year-on-year primarily due to a lower price level as polymer price reductions have been passed through to customers.

RPC will release its full year results 16 June.