Hardboy
06 Jun 2018
Re: what a hammering! If Even & H2 think it's a buying opportunity, then who cares what markets think? I increased my investment in RPC by 20% this morning @ 659.74. The timing was more by circumstance than judgement, but it's made a bit of a come back since.Valuing RPC at under £7 - a market leader in a niche market which is set to go on rising for the next 5 years, with a history of successful growth & raising returns - gives it a PE under 9.7 & a well covered yield of 4. That strikes me as cheap. At £10 it would value the company at a PE of 13.9 & a yield of 2.8, which still seems a little on the cheap side.
evenlongershot
06 Jun 2018
what a hammering! share price in free fall despite solid results. Presumably because of the threat of EU crackdown on plastic, and single use plastic in particular. Market over reaction? I'm hoping so as bought in again today. RPC don't make any of the blacklist single use items the EU plans to ban, it will surely invest in newer more eco plastics, has and expanding global reach, and plastic products are not going to go away overnight. Warren Buffet - buy when others are fearful!
Hardboy
06 Jun 2018
Re: FT comment From FT Comment: "However, that was not enough to reverse a 20 per cent fall in RPC’s share price since the end of September, as governments and regulators stepped up their fight against plastic waste. As one of Europe’s largest manufacturers of plastic packaging, the market feared RPC’s businesses would be directly affected. Recent EU proposals target single use plastics, such as cutlery and straws, and calls for all plastic bottles to be recycled by 2025."From this morning's release: "During the year, the recyclability, reusability and responsible disposal of plastic products came into greater focus with the announcement of a 25 Year Environment Plan in the UK and, at the end of May 2018, the launch of a draft Directive on Single use Plastics by the EU Commission. RPC does not manufacture any of the items that will be restricted under the proposed EU directive, and is proactively working with the policy makers and industry bodies to best achieve their wider goals."
decpos2
06 Jun 2018
Results I think the decline is more to do with re-financing debt that is due for maturity this year and next.
Hydrogen Economy
06 Jun 2018
FT comment worth a read [link] regulatory crackdown on single-use plastics, in the UK and in Europe, has raised many questions. Last Wednesday, with much of the City on its half-term holiday, the main one was: “If straws have to be made out of paper from now on, can you still get bendy ones — or will they just go soggy?” A very good question — and one that stumped this commentator. But, today, with FTSE 250 packaging group RPC reporting full-year results, it’s more a case of: will its profits and revenues hold up . . . or will they just go soggy?And, this morning, RPC has not been stumped. It has reported a 36 per cent rise in revenues, driven by acquisitions, which led to a commensurate 36 per cent rise in adjusted pre-tax profit, to £389m. Its most recent deal was the €75m acquisition of Nordfolien, which completed after the year end. On a statutory basis, pre-tax profit actually doubled to £317m — reflecting a “significant reduction in adjusting items” in the past year.But revenues also grew organically, by 2.8 per cent, continuing RPC’s recent record of increasing its sales by around 3 per cent a year, ignoring acquisitions. In China, organic revenue growth was 26 per cent, which helped to lift revenues outside Europe to £831m, from £384m previously — making them 22 per cent of the group total nowadays. Cash flow generation was “robust”, too, with net cash flows from operating activities up 40 per cent to £386.7m. But free cash flow was lower than the prior year, at £229m, due to the “non-repeatability of working capital related cash synergies”.Many of the improvements had been expected after a trading update in March said the positive trading trends the third quarter update had continued, and revenue for the full year was “expected to have grown significantly . . . aided by acquisitions, polymer price and foreign exchange tailwinds”. Back then, RPC had flagged that profitability and cash generation — before and after exceptional items — were set to meet management expectations. However, that was not enough to reverse a 20 per cent fall in RPC’s share price since the end of September, as governments and regulators stepped up their fight against plastic waste.As one of Europe’s largest manufacturers of plastic packaging, the market feared RPC’s businesses would be directly affected. Recent EU proposals target single use plastics, such as cutlery and straws, and calls for all plastic bottles to be recycled by 2025.So, today, it is the outlook that investors will be drinking in, not last year’s performance. RPC chief executive Pim Vervaat insisted the group was well placed to benefit from opportunities driven by the recent sustainability trends, and from e-commerce. He said RPC was still expecting “through the cycle underlying organic growth” to be ahead of ahead of GDP growth, and adjusted operating profit in the core businesses to improve — but more slowly. RPC expects it will be about £50m higher, but only by the financial year ending March 2021.Some analysts agree. Hargreaves Lansdown reckons that, longer term, RPC’s focus on innovative design should mean it is well placed to weather a more difficult plastics environment. Tougher regulation may even improve its position relative to smaller competitors.
Hardboy
06 Jun 2018
Re: Results Yes I must have missed something; or at least interpreted something differently from the professionals. Debt is high, but they've identified some businesses to offload which will bring it down; and they'd hardly have instigated the share buy back if they didn't feel it was manageable.
Hydrogen Economy
06 Jun 2018
Re: Results Well market found something not to like, down ~10% and falling! Seems a buy opportunity to me.
Hardboy
06 Jun 2018
Finals Only a quick glance through, but they look very strong - everything is up; some non core parts of the business identified for sale to help balance the pipeline, strong growth outside Europe (which is where the main area of growth is for the industry) Industry forecasts predict continued world wide growth in plastic packaging despite the headwinds over next 5 years. On first glance some very strong statements on the plastic waste issue which should help their position. One moan - I could not find the dividend dates stated in the release.
Hydrogen Economy
06 Jun 2018
Results Look excellent,.EPS adjusted and statutory up 16% and 66% respectively and both ahead of forecasts 72p Vs 70.8p and 61.6p Vs 58.2pRevenue growth of 36% to £3,748m driven by acquisitions and organic growth of 2.8%FCF slightly down at 229 Vs 239, but unsurprising given the rise of CAPEX from 175m to 241m (guidance at 250m for 2018).Debt up 1049m to 1139m, mainly due to the share buy-back of 83.4m which hasn’t shown much benefit to date. Div (105m in FY 2018) up 17% to 28p FY, 3.8% is a pretty fair yield for a company growing at this rate. Businesses equating to £209m turnover have been identified for disposal- should help.Obligatory discussion of how RPC are taking a lead on the environmental concerns. Should see a good rise here if the market was logical but who knows.The concerns about acquisition driven growth hiding lower returns on investment will remain, the quoted numbers below suggest some decline in ROCE but hardly dramatic. Return on net operating assets rose to 27.2% Vs 25.7% in 2017ROCE - 14.8% 2018, 15.2% 2017, 15.7% 2016, 15.2% 2015This accusation was made about Ashtead a couple of years back leading to a significant SP dip and lots of dire warnings. Since than SP have nearly trebled making them my best share. It was wrong then, I can’t be certain here but I’m willing to hold to find out.H2
Grill Bimsie
05 Jun 2018
From Citywire Rerating potential at RPC, says JefferiesConcerns around plastics manufacturers like RPC (RPC) are ‘overdone’, according to Jefferies, which believes the company is in line for a rerating.Analyst Cole Hathorn retained his ‘buy’ recommendation and target price of £11.50 on the shares, which fell 2% to 773.8p yesterday.Hathorn is predicting full-year results later this week will see RPC reiterate that its European integration programme is now substantially complete and confirm cost savings.‘RPC is the European plastic packaging leader with a c.6% market share in a fragmented industry,’ he said. ‘RPC polymer purchasing scale and production flexibility is a key competitive advantage, allowing RPC to buy polymer around 10% to 20% cheaper than peers. With both organic and further accretive mergers and acquisitions opportunities, we remain confident in RPC delivering medium-term growth.‘Trading on a discount to EU peers, we think concerns are overdone and we see rerating upside.’
sharegardener
04 Jun 2018
Re: FY Results Weds 6th June Hi H2,There have been mixed signals here with a slowdown in large acquisitions but still a lot of 'adjusted' figures and the Northern Trust criticisms of weak underlying performance still not fully rebutted. The drive against plastic waste hasnt helped either. RPC are ahead in the recyclability of their plastics - even though the problem is one of insufficient collection & recycling facilities. The dividend should go up even if the SP goes down!The buyback is still going on so share total is reducing so this will reduce cost of capital overall but I recall there are some convertible bonds due in another year or so. More clarity on Wednesday!SG
Hydrogen Economy
04 Jun 2018
FY Results Weds 6th June Performance well flagged in March TU and should be OK but recent history does not suggest will set the SP alight. H2 living in hope.
nk1999
30 Mar 2018
HL view "Plastic packaging manufacturer RPC has been under pressure to prove its long-running acquisition programme is creating value for shareholders, and not masking a lacklustre operating performance. Management have largely put a hold on acquisitions while it deals with those concerns.So far, we think the results are good. Organic growth is healthy and exceptional integration costs, the focus of much of the investor discontent, are falling. As a result cash generation is catching up with headline profits. From an operations perspective the company looks healthy, and the group looks set to maintain its 25-year track record of dividend growth.But RPC is facing new pressures. This time in the form of regulation.Following the airing of popular TV show 'Blue Planet', the UK government has faced calls to tighten up rules on plastic waste. The EU has followed suit, and is already looking at stricter controls.However, RPC argues that it's well placed to weather the political turbulence, and could even benefit. The group is Europe's leading recycler of polyethylene film and the majority of its products are recyclable. Its focus on innovation should mean it can respond quickly to demand for more easily recyclable products with minimal environmental impact. We tend to agree that RPC's scale and focus on innovation are significant advantages. Plastics remain a key weapon in fighting that other environmental bogie man, carbon emissions, and RPC is well placed to benefit from the consolidation the sector as well as increased demand.However, while we remain upbeat about RPC's prospects, it's unlikely it would escape a crackdown on plastic completely unscathed.The shares currently offer a prospective yield of 3.8%, and trade on 10.2 times expected earnings, slightly below their longer-term average."
Hydrogen Economy
29 Mar 2018
Trading Update TU pretty much in line with previous positive noises, Lots of stress on how environmental their operations and products are, and looking forward to positive discussions with UK Government about deposit return scheme. I'll bet they are. SP up over 1% at open, let's hope it can keep going.H2"The positive trading trends outlined in the third quarter update have continued, and revenue for the full year is expected to have grown significantly versus last year, driven by organic growth and aided by acquisitions, polymer price and foreign exchange tailwinds. Profitability and cash generation (both before and after exceptional items) are expected to be in-line with management expectations. The Group's financial position remains robust with good cash flow development and significant headroom in its debt facilities.
Hardboy
21 Mar 2018
Re: What will TU bring on 29th March Good summary HE.it's hard to know what RPC can achieve to make markets like them, but if they keep increasing sales, earnings and dividends, I'm happy & at some stage the fundamentals will bring the sp into line.I wouldn't worry too much about the effect of buy backs. In the short term they tend not to have a great affect (but of course the lower the price at which the buy backs take place the better the long term effect.) RPC has actually out performed the FTSE AS over the last 2 months (see graph) so although it appears to keep going down, it's only in line with overall market sentiment.
