Acquisitions drive RPC to 25th year of interim growth
Plastic products design and engineering company RPC Group reported first-half revenue growth of 53% to £1.88bn on Wednesday, which the board said reflected the contribution from acquisitions, organic growth, polymer price tailwinds and translation benefits from foreign exchange movements.
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The FTSE 250 firm said adjusted operating profit increased 58% to £214.7m for the six months to 30 September, with adjusted earnings per share up 27% to 36.4p.
Its return on sales increased 30 basis points to 11.4%, with the board also reporting “strong” cash generation, as statutory net cash from operating activities increased 62% to £245.4m, and free cash flow rose 45% to £171.7m.
RPC’s return on net operating assets expanded 320 basis points to 28.0%, which the board said reflected acquisition synergy realisation and profitability improvements
Its return on capital employed increased 30 basis points to 15.1%, which reportedly remained “well ahead” of its weighted average cost of capital.
The board confirmed the interim dividend of 7.8p - a 28% increase, representing the 25th year of consecutive growth.
“Trading was encouraging in the first half with record profitability levels and strong cash generation,” said RPC chief executive Pim Vervaat/
“The rationalisation of our European manufacturing footprint with 22 locations closing is now nearing completion with the benefits being realised as anticipated.
“The Letica integration is going well with the expected cost savings on track.”
On the strategic front, RPC said its European synergy programme was on track for completion in the current financial year, with exceptional costs “significantly lower” in the half and overall implementation costs lower than expected.
The Letica integration was said to be “well advanced”, along with the successful completion of the Astrapak acquisition.
More than 20% of revenues were now generated outside of Europe.
The board also reported a “healthy” innovation pipeline, with one additional innovation centre added in the half-year, taking the total to 32 worldwide.
Its share buyback scheme was also implemented during the period, to deliver further shareholder value, with £12.4m of capital deployed in the six months.
“Looking forward, the group continues to target innovation based growth leveraging its global footprint and will participate in the ongoing consolidation of the plastic packaging markets, albeit with no significant acquisitions anticipated in the remainder of this financial year. The second half of the year has started well,” Pim Vervaat added.