As announced in the company’s Q2 2015 results, Kath Kearney-Croft, who has been with the firm for eight years, and previously BOC Group in the US and UK, will take on the role of acting finance director.
Rexam’s sales up 5% with 3% average can volume growth
“Unfortunately, David Robbie, CFO, was diagnosed last month with a serious illness, and we all thought it was in everybody's best interests, and most importantly David's, that he takes an extended leave of absence to concentrate on his treatment and getting well,” said Kearney-Croft.
“I'm sure you'll all join me in wishing him well and wishing him luck in his treatment to make a full recovery, and come back to us as CFO in due course.”
The results showed Rexam’s sales were up 5% with 3% average can volume growth combined with the pass through of higher LME (London Metal Exchange) costs.
Reported operating profit was down 9%. Organic profit was also down 9%, with 2% volume growth more than offset by higher metal premium costs, commoditization of certain specialty cans in North America, and higher energy costs in Brazil.
Overall, the company saw good volume growth in Europe and Russia; some softness in the Middle East. North America volumes were impacted by softness in the CSD market; and South America, as expected, slowed down, but with encouraging continued strong growth in specialty cans.
“Many of the big beverage companies around the world are facing pretty tough challenges in terms of consumer preferences and in terms of their cost base. And we've got to do something to support them and maintain our position as a very valued supplier,” said Kearney-Croft.
“We have to do more with less, faster, better. We have this cost of complexity as customers demand more sizes, different decorations, more flexibility in terms of managing their inventories and therefore the supply chain.”
People are changing their preferences around CSD & beer
She added people are changing their preferences, for example, around carbonated soft drinks, but also within some of the beer categories as well.
“Either what sort of beer they want, more flavored beers, more flavored beverages. There's a lot of pressure on our customers from that perspective. There's a lot of pressure on them around regulation. So more and more countries are talking more about better labeling around what's in the drinks. And they're facing cost pressures.”
As a result, manufacturers are looking for differentiation around their products.
“They're expecting us to come up with innovations that allow them to differentiate the products on the shelf. But also around processes, such as global procurement.
“The main thing is, cans don't travel very far. They are full of air until they get filled. So the can business is a regional business. Our customers recognize that. They fill the cans regionally, they don't fill them globally.”
In Europe, Rexam had a good first half in Western Europe with volumes up 6%, driven by energy drinks and good growth in Germany, Spain, and Italy. In Germany, the market grew double digit as Lidl and Aldi relisted the can.
North America overall volumes down 3%
In North America, overall volumes were down 3%. Standard cans were down 6%, reflecting its exposure to the CSD market combined with unfavorable customer mix and lower promotions.
“Specialty cans were up 10% with good volume growth in 16 ounce and big cans driven by customers in a wide range of beverage categories, including craft beers and energy drinks,” said Kearney-Croft.
“The specialty can market in North America is maturing and it has impacted our returns at expected. Looking into the second half of the year, we anticipate continued softness in the CSD market with overall volumes to decline by around 3%.”