Packaging

Rising Costs Drive RPC Price Increase

Friday 25. July 2008 - The RPC Group has announced that it is to implement price increases across its business of up to 15% on full selling prices with immediate effect.

The company says the increases are the result of the unprecedented and continuing rises in input costs including polymer, electricity and transportation.

“The entire packaging industry is under acute pressure and we are not exempt from this,” said RPC Chief Executive Ron Marsh. “We have to implement these rises to maintain the viability of the Group and deliver a performance that is acceptable to our shareholders.”

As examples, RPC says that the charge for a year`s electricity supply contract in the UK has risen by 50% since October 2005, while the fuel price escalator in its transport contracts has resulted in a 16% hike in the price per mile since the beginning of 2008. The company also cites the cost of financing the hugely higher stock values that are created by raw material increases.

“We are operating on margins which simply cannot sustain these sort of increases and we therefore have to pass them on to our customers,” said Mr Marsh.

He added that transport charges account for 6% of RPC`s UK sales revenue and although the company had already committed over £1.5m in the last year to electricity saving measures, any savings achieved had been completely swamped by the magnitude of electricity cost increases.