Rexam sees volume growth in Europe, with energy drinks boosting beverage cans

Beverage can manufacturer Rexam has seen strong volume growth in Europe, including Russia, it said in a trading update this morning.

Rexam is enjoying ‘pretty good’ growth in its Russian business – unlike other companies - but chief executive Graham Chipchase remains cautious about the ‘very, very volatile’ environment in the country.

Alongside the UK, Germany and Italy, the country contributed to growth in European volumes over the beverage can maker’s Q1 results.

The increasing popularity of energy drinks has been boosting the market for cans across the region, said Chipchase, in the company’s earnings call.

Overall, global beverage can volumes were up 5% in the quarter, in line with the company’s plans.

“In Europe, I think we were ahead of the market and that's largely driven by energy drinks,” said Chipchase. “And also I think, if you look at the geographic mix we have compared to our competitors: we are strong in Germany and Northern Europe, where we've obviously got better market share than some of our competitors. I think it's a bit of a mix effect there.

“And we saw pretty good growth in Russia, which again others don't have. So that was up 7% for us, which was I think a pretty good result.”

Germany growth was up mid-teens, Italy up double-digits, and UK up high-single-digits, added Chipchase – ‘which is pretty good for those regions.’

Chipchase said a number of factors had led to new growth in the UK.

“I think the milder weather has helped a little bit in terms of beer consumption. And there is an element of being relatively confident about the economy. I think those all come into play. We haven't seen those sorts of numbers for some time.”

Aluminium premiums have fallen and Rexam says that – at current rates – it expects a reduced cost headwind of £10-15m this year, compared to the £30m headwind it expected when reporting its 2014 FY results in February.

South American volumes – which showed a strong start to the year – slowed down at the end of the quarter but that was expected, said Chipchase.

“I think going forward, one shouldn't extrapolate Q1 and create the year, because we are seeing South America and Brazil in particular, slowdown. We saw that as we got through at the end of our first quarter.

“And I would not like to put a bet on what happens in Russia going forward, because it clearly is very, very volatile there.”