Rexam, the world's largest beverage can maker, saw its share price slide as market worries about the weak dollar mounted yesterday.
The company, which produces more than 54 billion cans annually for customers including Carlsberg, Coca-Cola and Pepsico, said that the depressed greenback was eating into its profits. Rexam also lamented the impact of rising energy and transportation costs as the record price of oil, which touched $99.29 in November, added to the its woes.
The news made the company the second biggest loser on the FTSE 100 yesterday, dropping by more than 16 per cent, or 78.5p, to close at 409p. The company said: "In the second half, the US dollar has continued to weaken against the sterling and this will affect our reported results due to the translation impact on our US dollar earnings. In addition, energy and freight costs have been affected by the higher price of oil and this is expected to continue into 2008."
Emma Ormond, a research analyst at Oriel Securities, said: "We've downgraded our estimates for this year. These headwinds the weak dollar and freight costs will continue to affect the business next year. And unfortunately for them, most of these issues are beyond their control."
She added: "The market's initial reaction may have been a bit harsh, however, as investors are punishing stocks that do not meet their expectations. It is a good business but people will continue to avoid the stock until these problems have passed."
The company, which is due to announce its results for the current financial year in February 2008, also revealed that Owens-Illinois, the plastics operation which it bought for 1.8bn in July, will hit its bottom line owing to a 5m charge. In addition, it reported "start-up delays" at a new manufacturing plant in Manaus, Brazil.Reuse content