Rexam PLC Falls Despite Rise In Profits And Earnings

Rexam PLC (LON:REX) increases its dividend by 14%.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

drinks cans

Rexam (LSE: REX) — the global consumer packaging group and beverage can maker, which operates 55 can-making plants in over 20 countries — is currently down 4.6%, following release of its results for the full year 2013, having recovered from a near-10% fall in early trading.

Underlying pre-tax-profit grew 4%, to £372m, on sales that increased only 1%, to £3,943m, whilst underlying operating profit was flat.

But underlying earnings per share rose 13%, to 35.3p per share, and Rexam’s board is proposing a final dividend of 11.7p per share, giving a total dividend of 17.4p for the year — a 14% increase over 2012.

The company says that the increased dividend “reflects the board’s continuing confidence in the group” and that it’s in line with the policy of maintaining dividend cover in the range 2 to 2.5 times underlying earnings.

Target hit

The company announced that it had hit its target, set four years ago, of achieving a 15% ROCE by the end of 2013. It also said that it intends to return £450m to shareholders when sale of a major part of its Healthcare business completes later this year, adding to the almost-£1bn it’s returned over the past four years.

Commenting on the results, chief executive Graham Chipchase said:

“Rexam is now a focused beverage can maker, and our aim is to be the best in the industry. The work that we have done to restructure our company means that we are in good shape operationally. In 2014, despite an uncertain macroeconomic environment and some continued cost volatility, we expect to make further progress on a constant currency basis.

“We remain committed to managing what we can control and focusing on cash, cost and return on capital employed as we pursue our strategy of balancing growth and returns.

At 500p, Rexam’s share price is 2.5% down on this time last year, versus a near-6% rise in the FTSE 100. And Rexam lags the index over five years, too, gaining only 68%, compared to the FTSE’s 74% increase.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Jon doesn't own shares in Rexam.

(Photograph by Paul Flannery on flickr.)

More on Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »