Rexam has reported a 1.5 per cent decline in revenues and an 18 per cent fall in net profits as the group lost tax concessions and continued to be beset by German recycling laws.
The company, the world’s biggest maker of drinks cans, reported sales of £1.53 billion for the first half of the year, £23 million lower than a year before, noting “no recovery” in German demand for beverage tins following the introduction of packaging deposits.
The fall-off in sales prompted Rexam last month to close a furnace and can production plant in Germany. However, the company said that, with supermarkets setting up individual tin return and recycle schemes, “we are now seeing beverage cans returning to the store shelves”.
In the rest of Europe, can sales rose by 5 per cent, with “solid growth in most major markets”. Takings in the Americas were boosted by the takeover of Latasa, the Brazilian packaging company, last year and which Rexam said would lead to synergy savings of $30 million (£16.7 million) a year by 2006 compared with the $20 million originally targeted.
Advertisement
The company’s plastic packaging division achieved a 7.9 per cent rise, to £271 million, in sales, boosted by the acquisition of Plastic Omium Medical, which has enhanced Rexam’s ties with GlaxoSmithKline.
The company credited tie-ups for boosting underlying pre-tax profits by 19 per cent to £150 million. However, after tax, profits fell from £50 million to £41 million as the group’s tax payments soared by 84 per cent to £35 million. A year ago, Rexam’s tax liability was lowered through the use of stored up tax losses and by repayments following a reassessment.
The company warned that the company’s tax rate, which had increased from 27 per cent in the first half of 2003 to 29.3 per cent in the same period this year, was set to increase to 31 per cent “as the group moves towards the overall tax rates in the regions in which it operates”.