Weak demand continues to impact packaging business

In a trading update today, the group said its action programme, focused on cost reduction and cash generation, was well-advanced and was now being further extended. Having previously announced that the programme was expected to have an annual cash benefit of around £25 million and an up-front cash cost of £23 million, it is now anticipated that a further £5 million of cash cost will be incurred on the restructuring of a number of smaller businesses which have moved into losses. The paper and corrugated packaging businesses were affected by lower demand for boxes and by a continued fall in the UK price of corrugated case material during the second half of our financial year. A weaker performance of the UK paper business had been partially offset by a stronger performance in corrugated packaging, which benefited from the strength of the euro. In plastic packaging, the returnable transit packaging business continues to be especially affected by weaker demand due to its considerable involvement with particular industry sectors such as automotive and construction.