Rexam Plc to increase prices to bear rising premiums and energy costs

By revenue, Rexam Plc is the second-largest beverage can maker in the world but the rising aluminium premiums and high energy costs in Brazil are pushing the company to contemplate raising the price for their customers.

On Thursday, Rexam came out as one of the biggest losers in the FTSE-250 Midcap Index slipping as much as 8.5%.

The aluminium premium in Europe and North America are at an all time high caused by the strong global demands coupled with restricted supply of the metal. This has caused Rexam to review its cost base while it deals with top names in the beverage industry like Coca-Cola Co, Anheuser-Busch InBey, Heineken and PepsiCo Inc.

The aluminium premium which was $300 at the beginning of the year has jumped up to $500 per tonne which will result in additional costs of about 30 million pounds for the next year, the company declared.

Energy costs in Brazil are also expected to rise by 15 million pounds next year as the country is struggling with a severe bout of drought that has had a significant impact on the country’s hydroelectric power generation.

Rexam however goes onto say that their overall global beverage cans volumes have increased by 4% since July 1 especially because of Russia which already accounts for 5-6% of the company’s business. The future for 2015 also looks positive and further growth is expected despite challenging conditions, the company said in a statement.