Rexam figures disappoint market

Consumer packaging company Rexam's first-half figures have highlighted a dwindling in consumer demand, triggering a 5% fall in early trading this morning.

The drinks packaging part of the business has seen demand struggle this year, broadly due to weather conditions across Europe. Rexam announced this news in a profit update in April, and momentum has failed to return since. There has been an increase in demand by 1% year-on-year, but this is well below the hoped-for 3%.

It has been known for some time that the company is looking to strip off its healthcare business, but as yet there is no specific update other than the company stating that they are making good progress. Unfortunately, in the current phase of the global economic cycle, it is definitely a buyers’ market, and it is unlikely that they will be able to quickly conclude this business. The more encouraging news is that the process has helped uncover fresh investment interest in their beverage can business.

The last three weeks have seen almost this entire year’s share price gains wiped from the company; however, viewed over a two-year period, its performance has yielded a healthy return. No doubt there will be some investors spooked by last week’s decisive break below the 200-day moving average however, and it will be interesting to see if the 3.39% dividend yield is enough to keep investors happy.

Rexam plc chart

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