Final Pre-Close Trading Statement

RPC Group

28th March 2013

Pre-close trading statement

RPC Group, Europe's leading supplier of rigid plastic packaging, today issues its pre-close trading statement for the financial year ending 31st March 2013 ahead of its preliminary results due to be published on the 5th June.

Trading performance

Activity levels in the fourth quarter were better compared with the previous quarter with the growth in higher added value products such as coffee capsules continuing. When taking into account discontinued businesses, sales volumes for the year are anticipated to be on a similar level to last year with the sales mix improving. The upturn in January has not been sustained and trading conditions remain challenging against the backdrop of the difficult macro-economic conditions in the Eurozone and the UK which affected overall activity levels and competitive intensity.

Polymer prices rose to near record levels by the end of September and reduced gradually towards the end of 2012 before rising again in the fourth quarter. Polymer price variations are generally passed on to the customer base albeit with a time lag. This time lag effect had a negative overall impact on operating profit in 2012/13 whereas it was beneficial in the previous financial year.

Revenue for the financial year 2012/13 is expected to be lower than the previous year, largely as a consequence of the strength of sterling versus the euro, in which a significant part of the Group's turnover is recorded. This currency translation effect is estimated to have a negative impact on the operating profit of circa £4m. The operating profit (before exceptional items) as reported in sterling for the twelve months to 31 March 2013 is therefore anticipated to be slightly below last year. When measured on a constant currency basis, the overall performance is anticipated to be similar to last year as the material adverse polymer time lag variance has been compensated by cost reduction measures (including Superfos synergies) and an enhanced sales mix.

The financial position remains robust with satisfactory cash flow development in the fourth quarter and significant headroom under the Group's debt facilities.

Other developments

The "Fitter for the Future" business optimisation programme is progressing well with the site closures at Beuningen (Netherlands) and Antwerp (Belgium) due to be completed in 2013. Good progress has also been made on the other cost efficiency measures. The integration of the Manuplastics business acquired in November 2012 is proceeding to plan with the realisation of the cost synergies largely complete.

Outlook

As a result of flat economic growth forecasts for many of our European markets and the challenging trading environment, the Board currently expects limited overall organic growth for the financial year 2013/14. The Group will continue to decisively act upon those matters within its control in relation to sales mix and cost efficiency measures with further progress expected in the new financial year. Opportunities for value adding growth via corporate development activities, both within and outside of Europe, will also be actively pursued. The Group's strong European market positions, leading innovation capability, scale and competitiveness continue to underpin value and growth fundamentals for RPC's portfolio of businesses.

Jamie Pike, RPC's Chairman said:

"The continuing lack of growth in Europe, which is expected to continue in 2013/14, has had an impact on the level of profitability. The overall performance in these challenging trading conditions remains however robust and the Group is well placed to benefit from economic recovery from a position of sound financial strength. The Board remains confident in RPC's prospects."

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