A spokesperson for the company said Rexam is “examining options” for its beverage and specialty closures businesses, including a possible sale and further restructuring.
Investors greeted the news positively as shares in the company rose by almost 4 per cent in London trading yesterday.
Bofa-Merrill Lynch analyst Ross Gilardi said that getting out of closures could be good news for Rexam if it is offered a reasonable price. “Rexam would free itself of the weakest link in its plastics portfolio,” said the analyst in a note to investors.
“Enduring weakness”
Rexam has identified closures, especially beverage closures, as a weak spot in its portfolio in recent trading statements. In its full year statement 2009, the UK-based company referred to the “enduring weakness in beverage closures”.
And in its half year trading update this summer, it said: “In closures, performance continued to be disappointing. Although sales increased owing to resin pass through, volumes decreased 9 per cent with the continued decline in the demand for beverage closures.”
One positive point in the business segment is high barrier food containers, which Rexam said returned to growth in the first half of 2010. A spokesperson for Rexam said these products are not included in the review on its future in closures.
Closures are part of the plastics packaging business at Rexam, which also includes a personal care and healthcare segment. The division as a whole experienced 6 per cent organic growth to £667m in H1 this year despite continued volume reductions in beverage closures. The closures business accounts for about a third of turnover from the plastic packaging division.
Rexam has already implemented a restructuring programme of its closures unit that is now nearing completion. This has resulted in job cuts and the closure of one plant in North Carolina and another in Michigan.