Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
When we become accustomed to studying high-profile companies, we often lose sight of other opportunities. One of those hidden opportunities is Rexam (LSE:REX), one of the world’s top three producers of metal beverage cans. Never heard of them before? Now is a good time to learn about them.
Although Rexam may not be a household name, or even a name familiar across the broad spectrum of investors, there is a significant likelihood that almost every person reading this will hold a Rexam product in their hand at least once a day. If you have had a can of any drink produced by Red Bull, the Coca-Cola, Pepsico, Anheuser-Busch Inbev or Heineken companies, you have probably touched a can manufactured by Rexam.
Rexam has some 8,000 employees working from 55 production facilities in 20 different countries. Its net sales revenue in FY2013 was £3.9 billion ($6.5 billion). It is the leading beverage can producer in Europe and South America, and it is the second leading in North America.
It’s odd that I should be writing about Rexam, since my last post was about Alcoa, the world’s leading producer of aluminum. But that’s not what compelled me to write about Rexam. I had, in fact, come across the company’s press release announcing the promotion of Rich Grimley from COO of the company’s North & South American business to Director of Operations in the UK. Grimley will assume his new role as at 01 January 2015.
The reason the I took note of the release was that Claude Marbach, the husband of a friend of mine, has been named as Grimley’s successor. He has been the President of Sales and Marketing for North American. Following up on my obvious curiosity, I decided to investigate further. What I found was a company that is an interesting candidate for anyone’s portfolio. Here are a few reasons why:
- Rexam has a legacy of steady operating margins, due, at least in part, to its commitment to long-term contracts with annual supply targets.
- Rexam has a commitment to customer satisfaction that is far greater than most companies (like UK banks, for instance). They cannot afford to pay lip service to this core policy.
- Rexam is resilient and highly capable of developing new-style cans that represent a packaging differentiation for their customers on store shelves.
- Rexam has divested its non-core product lines and is focused on improving what it already does well.
- Rexam is strategically well positioned in the rising market of energy drinks.
- Rexam is putting an emphasis on specialty can production in Europe. This is somewhat implied in the promotions of Grimly and Marbach.
- Did I mention Red Bull? Rexam is the exclusive supplier of cans for Red Bull.
From an investment perspective, the REX share price is currently at 468.00 pence with a 52 week high and low of 603.00 and 464.88 respectively. Its has been trading below its 50-day moving average since 02 June this year, possible signalling an upswing to come.
On 01 August, Rexam reported pre-tax profit of £166 million from continuing operations, down only slightly from the same period in 2013. Beverage can volume increased 4%. The company has continued to operate successfully despite record high costs of raw product, indicating a tightly-run ship that can withstand the economic headwinds and continue on course.
