* FY underlying pretax profit up 15 pct to 450 mln stg
* To sell personal care business, keep healthcare unit
* Analysts say personal care could fetch about 350 mln stg
* To combine reinvesting with cash returns to shareholders
* Shares rise 4.7 percent to their highest since May 2008
By Adveith Nair
LONDON, Feb 22 Europe's largest drinks can
maker Rexam put its underperforming personal care
business up for sale and said it would look to return cash to
shareholders, sending its shares to their highest level in
nearly four years.
The British firm, which also reported full-year profits
largely in line with expectations on Wednesday, said strength in
its core beverage cans business offset continued weakness at
plastic packaging, which includes the personal care and
Rexam, which makes Red Bull and PepsiCo cans as well
as packaging for food, healthcare and cosmetic products, said it
had decided to hive off the underperforming personal care unit
as it did not expect a turnaround in the near term. The unit has
been hit by rising costs and lower volumes.
The firm plans, however, to retain the healthcare unit.
Chief Executive Graham Chipchase declined to say how much
the business could be sold for, or give a timeframe. Analysts
have said the personal care unit could fetch up to 350 million
pounds ($554 million).
Full-year operating profit at the company's plastic
packaging unit was down 14 percent at 102 million pounds, with
the business accounting for 19 percent of group underlying
operating profit, down from 23 percent the year before.
"Current trading is weak, but we expect it (personal care)
to be sold," BofA-Merrill Lynch analyst Ross Gilardi said. "We
think most of the potential proceeds will go back to holders in
the form of share buybacks and dividends."
The analyst pointed to Rexam's U.S.-based peer, packaging
products maker Ball Corp, whose stock hit an all-time
high earlier this month after the company instituted a share
buyback and raised its dividend 43 percent.
Shares in Rexam climbed 4.7 percent to 402.8 pence, their
highest levels since May 2008, and were the top percentage
risers on Britain's blue-chip FTSE index.
"Over the last two years, we have succeeded in strengthening
the balance sheet and protecting our credit rating," the company
said in a statement. "We will maintain an appropriate financial
position but will shift focus to a combination of reinvestment
in the business and cash returns to shareholders."
Jefferies analyst Sandy Morris said reinvestment could be
funded by future operating cash flows, implying the majority of
any disposal proceeds could be returned to shareholders.
Full-year pretax profit rose 15 percent to 450 million
pounds, in line with a consensus forecast of 447 million pounds,
according to a company-supplied poll.
The rise was driven by a 14 percent jump in underlying
operating profit at Rexam's beverage cans unit, which now
accounts for 81 percent of group profit.