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UPDATE 2-Rexam H2 trading in line, banks on S. America
November 16, 2010 / 7:47 AM / 7 years ago

UPDATE 2-Rexam H2 trading in line, banks on S. America

* Trading from July in line with company’s expectations

* Growth rate for drinks cans in Europe slower in H2

* Sees N.America drinks cans 2011 profit similiar to 2010

(Adds CEO comment, shares)

By Golnar Motevalli

LONDON, Nov 16 (Reuters) - Rexam REX.L, Europe’s largest drinks can maker, said it expected second-half results in line with its expectations, with strong growth in South America countering weaker sales in Europe and North America.

Rexam, which makes cans for Carlsberg (CARLb.CO) and Austria-based Red Bull, said its beverage cans and plastic packaging businesses performed as it expected in the period from July 1 and it would focus on investing in South America.

“We continue to expect our results in the second half of 2010 to be similar to those of the first and remain focused on cash, cost and return on capital,” chief executive Graham Chipchase said on Tuesday.

“In beverage cans, volume growth in Europe was driven by specialty cans, although as expected the growth rate in the period was somewhat slower than in the first half due to stronger prior year comparators,” the company said.

Rexam will lose also some volume in its North American drinks can business by the end of this year and the company said contract negotiations with customers, as part of efforts to broaden its client base, were progressing well.

On a conference call with analysts Chipchase said no contracts had yet been signed in North America but that the next step was “largely about crossing the Ts and dotting the Is”.

Rexam, which also makes lipstick cases for L‘Oreal (OREP.PA), said in Brazil it would increase capacity by 1.7 billion cans, helping to hike-up total capacity in South America to 14 billion cans in 2012, from 11 billion in 2009.

Chipchase said business in Russia had good long-term prospects, despite receiving a “mixed bag” of feedback from customers there, and said sales from the country would be improved, but still negative.

Seymour Pierce analyst Caroline de La Soujeole reiterated her “buy” rating on Rexam’s stock.

“Strong growth in higher margin speciality cans will offset lower demand in standard sizes and very strong demand in South America will offset weaker growth in developed economies,” Soujeole wrote in a note.

Shares in the company, which are listed on the FTSE 100 index of top British firms, rose by 2 percent at 0856 GMT to 317 pence each.

Analysts forecast Rexam to post full year pretax profit of 396 million pounds ($631 million) and revenue of 4.8 billion pounds, according to research compiled by Thomson Reuters I/B/E/S. ($1=.6274 Pound)

Reporting by Golnar Motevalli

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