At the end of the quarter, net debt was £2.7bn, better than the company’s plans at this stage of the year, and cash flow is progressing well as it reduces capital expenditure and improves working capital. The negotiation for the refinancing of the £775m revolving credit facility expiring in November 2010 is on track and is expected to be completed in the first half.
The performance of Rexam’s Beverage Cans business held up reasonably well. The overall market in Europe declined due to lower demand in western and eastern Europe. Rexam’s own performance reflected that of the market, together with weakness in Russia and the impact of customer buy forwards in late 2008 ahead of January 2009 price increases.
In North America, the market decline experienced in the last quarter of 2008 eased. In South America, volumes were robust, though results were affected by a weaker Brazilian Real. In its cans business globally, it has reduced inventory levels in the first quarter to meet market demand and optimise cash flow, though this has resulted in some curtailment costs.
Rexam expects the second half of 2009 to improve on the first half as it heads into the traditionally busier summer season.
Commenting on current trading, Leslie Van de Walle, Rexam’s CEO, said: “Rexam’s first-quarter underlying operating profit was in line with last year, albeit with the benefit of foreign exchange translation. Our Beverage Cans business is holding up reasonably well, though we’re seeing weaker than expected volumes in Europe, especially Russia. In Plastic Packaging, we’re reducing our cost base. We continue to monitor the situation carefully to ensure supply and demand are in balance across both our businesses.
“Our longer term strategy remains unchanged. We will continue to focus on the core drivers which have made Rexam successful: the efficiency of our operations, the quality of our products, the level of service we offer and our ability to innovate. In the shorter term, the full extent to which the economic downturn will affect our trading in 2009 remains unclear, but we’ll continue to focus on generating cash and reducing costs by proactively managing the variables over which we do have control.”
© FoodBev Media Ltd 2019