UK efficiency gains

British Polythene Industries’ (BPI’s) AGM update confirmed the strong start to the year in Q1 continued in April, slightly tempered by some upward pressure in polymer prices latterly . The company has also announced a proposed transfer of activity from its Sevenoaks site to another group facility. The associated £1m exceptional charge in the current year will be matched by the annual profit uplift in subsequent years once completed. This triggers a further upgrade to our estimates and should sup

Strong start to the year

British Polythene Industries (BPI) has a seasonally stronger H1 trading pattern and a positive Q1 trading update allows us to upgrade estimates again, having done so after the FY15 results. The previously announced disposal of a Chinese subsidiary has completed on slightly better terms than previous guidance. Despite this progress, BPI’s rating remains stubbornly in single-digit P/E territory.

Steering a steady course

British Polythene Industries (BPI) successfully navigated a challenging FY15 trading year to deliver very respectable progress in profitability, earnings and dividends. Management is sticking to its tried and tested formula of investing in the business to enhance capability, market position and product offering and we expect further progress to flow from this.

Out of China

British Polythene Industries (BPI) is disposing of its Chinese facility for an expected £9.4m. We estimate this to be modestly earnings enhancing with an expected £4m book profit. UK-oriented revenues will largely be retained and the group’s grow and invest strategy is unaffected by the sale. Valuation multiples are now in single-digit territory with, we expect, a growing yield. FY15 results are scheduled for 29 February

Managing variable demand, maintaining progress

An IMS noted maintained FY15 management expectations, despite some weaker areas of demand seen since the interim results. While H2 volume has been softer than anticipated, profitability has been sustained through operating efficiencies, investment and some easing of polymer pricing during the period. On unchanged estimates, BPI’s P/E rating is approaching single-digit levels.

Trading resilience underpins H1 gains

Progress was expected and achieved in H1, although trading was not without its challenges. With polymer input prices showing signs of easing and more stable FX cross-rates currently, we expect a solid profit performance over the remainder of the year.

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