RPC Group's quarterly profits ahead of expectations, launches buyback

RPC Group, the plastic packaging specialist, reported first-quarter sales and profits ahead of last year's and intends to begin a £100m share buyback programme.

The FTSE 250-listed company said it had generated £960m revenues in the three months to 30 June 2017, not too far from the £1.2bn generated in the whole of the first half in 2016.

Continued organic growth, the contribution from acquisitions, including a good start from Letica, and positive foreign exchange movements all contributed to the increase.

Group margins and profitability were ahead of management expectations before and after exceptional items, with RPC saying favourable currency translation effect had offset the negative time lag impact from passing through higher polymer prices.

Cash flow development remains on track.

Having upped strategic buying of polymer from 310 kilotonnes in 2013/14 to 1,100kt on an annualised basis now, chief executive Pim Vervaat said the implementation of the Vision 2020 growth strategy was "progressing well with continued organic growth, good profitability levels and robust cash generation".

"The board is confident that the group's performance going forward will continue to deliver value to its shareholders."

RPC does not plan to make any significant acquisitions over the rest of the year over and above those already announced.

Directors still see a "significant" opportunity to consolidate European markets remains, but given the pace of its recent acquisition activity, the near term focus will be on "delivering the announced synergy realisation programme; demonstrating the contribution of the newly acquired businesses; whilst continuing to drive organic growth, margin improvement, return on capital and strong cash flow generation".

Executive pay will be re-aligned to include further emphasis on returns on capital and cash flow generation, with shareholders to be consulted as part of this process.