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Beauty packaging helps prop up Rexam

By Simon Pitman and Ahmed ElAmin , 29-Aug-2005

Rexam, which shed its UK glass unit for a £24m loss earlier this year, said today it has benefited in the first half of 2005 by successfully passing on aluminium price increases to its beveragecan customers.

Rexam is the world's largest beverage can manufacturer and is also building a reputation as one of the leading players in the European and global beauty packaging business. The company reported organic sales growth in the first half of 2.5 per cent, of which 1.9 percentage points were due to the recovery ofaluminium price increases in its beverage can segment. Organic sales excludes the effect of acquisitions, disposals and currency translation. Sales from ongoing operations were up 4 per cent to £1.538 billion (€2.253bn). Whether Rexam will be able to successfully pass on further expected price increases in aluminium, along with higher energy costs, remains an openquestion for its all-important beverage sector. Aluminum demand will outstrip supplies this year, with primary aluminium prices on the London Metals Exchange rising about 12 per cent in the first quarter. On the beauty side, the company reported that its plastics division, which incorporates plastic bottles, pharmaceutical and beauty packaging operations, the company reported that sales were continuing to grow at a healthy rate, although the divisions performance as a whole was off-set by a competitive plastic bottle market. Overall sales for the division were up 5 per cent to £284 million, but profits were down from £36 million to £34 million, reflecting price pressures for plastic beverage packaging. The company's beauty business, which is one of the mainstays of the plastics packaging division, has continued its 'generally buoyant' performance, as sales of pumps continued to prove particularly strong. Currently beauty packaging products are manufactured at 14 plants in Europe, Asia and the Americas - with Brazil, China and Indonesia accounting for its manufacturing interests in the developing markets. This is in line with the company's increasing focus on emerging markets, which now account for nearly 15 per cent of the groups packaging operations. Currently its core emerging markets are Brazil, Russia and China. Rexam's beauty packaging products include spray samplers, lipstick cases, fragrance closures, compacts, a series of closures as well as fragrance dispensing systems that centre around fine-mist pumps. The company said that looking to the rest of 2005 it would continue to build on its current position by supplementing organic growth with acquisitions. Saying that the second half of the year had already got off to a positive start, the company said that it remained confident that it would offset cost inflations through volume and mix improvements.

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