RPC Group report record half-year as acquisitions and growth strategy starts to pay off

International plastics specialist RPC Group Plc has reported a huge increase in group revenues and profit in its half-year results. 

The FTSE 250 firm said that it had hit record revenue, profit, and cash flow during the period as its Vision 2020 growth strategy started to have a significant impact. 

Revenues grew 53% to £1.2bn from £800m in 2015, whilst adj EBITDA grew 65% to £198m, and adj EPS grew 45% to 30.7p. The growth was enhanced by its acquisitions, as on an underlying organic basis, revenue increased 3%. It also raised its dividend 35% to 6.5p/share.

During the first-half RPC acquired 5 companies, and management expects cost synergies to reach €100m per year.

Brokers remain bullish about RPC, with Jefferies, Credit Suisse, Deutsche Bank, Numis, and Panmure Gordon all reiterating buy ratings since October. Panmure released a report this morning saying RPC had delivered yet another set of strong results, and confirmed PBT was "materially" better than it had forecast:

"Topline growth has principally being driven by acquisitions (GCS + BPI), though organic remains a feature (and crucially remains at levels consistent with FY16). The two recent acquisitions have quickly been assimilated into the panEuropean platform and management has raised cost synergy guidance (again).

Panmure also says that whilst the acquisitions have enhanced the business, RPC's organic growth is still outperforming the marketing at 3% in the first-half.

CEO Pim Vervaat said he was very pleased with the overall performance in H1 and struck a positive tone about future growth and H2:

"...record profitability levels with solid underlying organic growth and strong cash conversion. Both the GCS and BPI acquisitions, whose integration is well advanced, have performed well with additional cost synergies identified. As we successfully execute our stated Vision 2020 strategy, further attractive opportunities to grow the Group present themselves as the pace of consolidation in the industry accelerates.

 

Good opportunities exist for higher added value organic growth whilst at the same time consolidating certain market positions. The second half year has started well."

RPC's share price rose 8% in early trading.