RPC profit more than doubles on acquisitions, weak pound

Profit at RPC more than doubled in the year to the end of March as it benefited from recent acquisitions and a weaker pound.

Pre-tax profit surged 105% to £154.7m on revenue of £2.75bn, up 67% on the previous year. Revenue reflected a 3% like-for-like growth in sales and the contribution from acquisitions, with the return on sales improving to 11.2% from 10.6% in 2016.

The company's 2016/17 acquisitions in total contributed £415m to sales, £36.1m to adjusted operating profit and 1.6p to adjusted earnings per share and RPC said transaction fees for all the deals have been charged to the income statement as exceptional costs.

The FTSE 250 plastic products design and engineering group also said the full-year results were supported by the weaker pound, as 73% of its turnover is reported in non-sterling currencies.

Adjusted operating profit came in at £308.2m, up from £174.3m the year before. Statutory operating profit, meanwhile, was £192m compared to £95m in 2016. Russ Mould, investment director at AJ Bell, pointed out that the difference between the adjusted figure and the statutory figure is the result of items deemed as "exceptional", i.e. £116m in costs related to bringing new businesses into the group. Mould made the point that these "allegedly exceptional" costs keep recurring.

The company recommended a final dividend of 17.9p per share, taking the total dividend for the year to 24.0p per share, up from 16.0p the year before.

Chief executive Pim Vervaat said: "The implementation of the Vision 2020 growth strategy is progressing well, reflected in a good trading performance in 2016/17 with continued organic growth and achieving record profitability levels with robust cash generation. Acquisitions made since the launch of the strategy in 2013 continue to add value including the recent GCS and BPI acquisitions, whose performance in the year was better than expected.

"The recently completed Letica acquisition will provide an enhanced platform for growth in North America and has made a good start under RPC's ownership. Going forward, the group continues to explore opportunities for growth in line with its strategy. The new financial year has started in line with management's expectations."

At 1148 BST, the shares were down 2.2% to 831.50p.