RPC Q3 revenues up but operating profit flat after weak Christmas

Plastic packaging company RPC Group, is now being eyed up by US packaging group Berry Global as well as Apollo Global Management, posted a rise in third-quarter revenue on Friday and flat operating profit.

In an update for 1 October to 31 December 2018, the company said revenues came in at £894m, up 1.4% from the corresponding period last year on an organic basis, with sales growth moderating towards the end of the quarter due to weak trading around the Christmas period.

Organic growth for the first three quarters ended 31 December 2018 was 2.6%.

Meanwhile, operating profit was similar to the third quarter of the previous year. RPC said that while polymer price changes continue to be passed through to the customer base, the time lag in doing so resulted in a temporary headwind which totalled £10m at the end of the first six months of the year.

The group said its financial position remains "robust", with "significant" headroom available under existing debt facilities. It also said it was finalising preparations to mitigate any disruption resulting from Brexit. Manufacturing sites are building buffer stocks which has resulted in a negative impact on working capital and thus cash flow in the period, it said.

In addition, net finance costs in the quarter were higher than the corresponding period last year due to increased net debt, LIBOR increases and margin ratchets.

After it emerged on Thursday that Berry Global was considering making a cash offer for RPC - a week after a £3.3bn bid from private equity firm Apollo was recommended by its board - the company said it will engage with Berry "in the interests of delivering best value to shareholders".

At 0920 GMT, the shares were flat at 795.20p.