BPI forecasts lower half year results due to polymer price rises

29 June 2010 09:38  [Source: ICIS news]

LONDON (ICIS news)--British Polythene Industries’ (BPI) has lowered its expectations for the first half of 2010 and now anticipates earnings to be slightly lower year-on-year as margins are squeezed by continuing increases in polymer prices, the polyethylene film maker said in a pre-close trading statement on Tuesday.

Earlier in the year, the company said it expected overall results for the first six months to 30 June 2010 would be broadly similar to the same period last year.

In advance of its interim results to be published on 31 August, BPI said that despite overall volumes running about 5% above the same period for 2009, unseasonal weather continued to pose a risk for the agricultural growing season and demand for silage films.

“We were impacted by further polymer price increases in June and, as the relatively cool and dry weather continued, we saw less demand than normal for silage stretch wrap during the critical early summer period,” it said.

"On 22 June we announced the disposal of the vacated site at Stockton for a cash consideration of £6m ($9m; €7m), resulting in a gain on sale of £3.5m. The reduction in borrowings from this disposal will be more than offset by an increase in our working capital as a result of this year’s polymer price increases," it added.

BPI also said trading across the board continued to be challenging as it addressed the impact of the polymer price increases.

“Polymer prices have started to ease in North America and the Far East, but remain obstinately firm in Western Europe,” it said.

($1 =  €0.81; €1 = £0.81)

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By: Franco Capaldo
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