The packaging supplier said plastics packaging continued to be affected by the depressed economy and cutbacks made to customer inventories.
Weak plastic packaging sales
Plastics packaging sales volumes fell 10 per cent in the first quarter ending 31 March but Rexam said this was largely in line with expectations.
However, performance varied significantly within the business. Rexam said the healthcare division performed well while personal care and closures exhibited “sustained weakness”.
To adapt to the weakened top line growth in the plastics packaging business, Rexam is beginning a restructuring programme to reduce fixed costs.
Restructuring plans and costs
Rexam hopes to achieve annual savings of £30m from the programme from 2010 onwards.
Meanwhile, the company accounts will incur a one-off charge of about £40m, of which £35m will be cash costs.
Rexam’s CEO Leslie Van de Walle said: “In plastic packaging, we are reducing our cost base. We continue to monitor the situation carefully to ensure supply and demand are in balance across both our businesses.”
These cash costs of the reorganization will be met by reducing capital expenditure and by making working capital improvements.
Rexam said it is improving the health of its balance sheet having reduced net debt to £2.7bn at the end of the latest quarter.
In recent quarters the company has benefited from the weakness of the Pound, which has offset weaker organic sales figures and helped the company adapt financially to declining demand.
