UK-based Rexam has announced it has put its closures business up for sales, confirming industry rumours that the packaging giant was looking to divest the struggling division.
In a statement, the company said: “We are currently marketing the beverage and specialty operations of the closures division for disposal. We have previously highlighted the issues in these operations, which are almost exclusively North American, and in 2010 they continued to experience challenging conditions.”
Rexam blamed a fall in sales to the CSD segment and a 30% decline in volumes in the US water bottle market.
Any sale of the business will exclude the high barrier food container part of the unit, says Rexam.
In December 2010, an anonymous source in the closures unit told Plastics News, sister publication of European Plastics News that employees had already been informed that an internal audit recently identified the business as ripe for divestiture.
Spokesperson Greg Brooke then confirmed that the parent company was “exploring options”.
The company says the plastic packaging division will now focus on personal care, including high barrier food containers, and healthcare.
Rexam announced the news as part of the 2010 financial results, which showed that underlying profit before tax in 2010 was up 45% to £412m (€298m). Total sales rose slightly – 2% – to £5bn (€3.6bn).
In the plastics division, sales grew 4% to £942m (€680m), thanks to passing higher resin costs onto customers, and operating profit rose 17% to £119m (€86m).
The 2010 restructuring plan, which saw eight plants close in the US and Europe, resulted in annual savings of £34m (€25m)
Rexam sales closures business