The boss of Rexam, the FTSE 100 maker of cans for Red Bull, Heineken and Pepsi, warned that the global economy remained “unstable” as he tried to explain a shock profit warning today.
Graham Chipchase said that first-half figures would be below expectations in the first half of the year, though there should be some pick-up before the end of 2013. Sales growth was 1%, against 6% in the first six months of 2012.
He said: “The macroeconomic environment is pretty unstable — you only have to look at the flare-ups in Brazil and Turkey. We’re confident that we can deal with what we can see [economically].”
Like many retail chiefs, Chipchase also cited Europe’s terrible weather this year as a reason for fewer people buying fizzy drinks and beer. However, he conceded that the impact of rain across the continent was far less in regions where the economy had stood up well, such as the Nordics.
Rexam also surprised the market by announcing the sale of its healthcare businesses, which makes syringes and asthma inhalers. In February, Chipchase said that he had “no plans” to sell the division, even though its profit dwindled from £65 million to £48 million last year.
Today he insisted that the business was always available for the right price given that it accounted for only around a tenth of a group that sells more than £4.3 billion in cans and packaging a year.
Chipchase said that a combination of stabilising the business, a “reasonably attractive M&A environment” and substantial interest from potential buyers in the past month had prompted the decision to sell. However, he pointed out that no firm offers had yet been made.
Analysts at Cantor Research said that the trading update was “disappointing”, but argued that the healthcare sale was “a positive step” as it would allow Rexam to focus on its core can making work.
Among investors, the negatives appeared to outweighs the positives, as the share price fell more than 4.2% to 445.3p.
