Rexam to sell personal care business
Profits up 15% in 2011 but personal care trading ‘disappointing’
Following recent speculation, British packaging supplier Rexam has confirmed that it intends to sell its personal care business. And although the company has not commented on the time frame or expected value, analysts believe the business could sell for up to £350m.
The company’s personal care business is part of Rexam’s plastic packaging unit, which also comprises health care – although Rexam says it no plans to sell that half of the unit.
Rexam’s 2011 results, released today, were in line with expectations; underlying profit before tax was £450m, an increase of 15% on 2010. But growth was attributed to a strong performance by the company’s beverage cans unit while trading in plastic packaging (especially personal care) was described as ‘disappointing’.
According to Rexam, while there were pockets of good performance in personal care in 2011 – such as dispensing systems for fragrance and make-up – other areas including foam pumps saw weak sales. Cautious consumer behaviour in North America resulted in lower volumes while volumes in Europe were flat, said the company. Meanwhile growth in Brazil was offset by weakness in Asia, due to high input costs and competitive pricing.
As such, Rexam has begun the process to market its personal care line for divestment. Commenting on the decision, chief executive Graham Chipchase said: “Following a strategic review of our personal care business, which includes the high barrier food container operation, the board recently decided that, given our focus on returns, it should be marketed actively for divestment in its entirety. We also believe that this will improve the range of projects in which we can invest in both beverage cans and health care. So, while personal care is an attractive, well run business and given that we can generate better returns elsewhere in the group, it is likely to be of greater value to another owner.”
