Business

British Polythene Industries (BPI), the polythene producer, has told Packaging News that demand for packaging materials in the retail sector is holding up, but demand in the industrial sector is much weaker.

In an interim management statement issued today (18 November) the company said demand from the UK construction sector, which accounts for around 15% of group turnover, is currently down by a third.

However, demand from markets including agriculture and food retail continue to show modest volume gains.

The company reported that overall group volumes for the nine months to 30 September were in line with last year, but were down 5% in the third quarter compared with 2007.

BPI said it has started to see an easing in raw material prices, but this has not helped its recovery of profit levels which continued to be hit by record high energy costs.

Chief executive John Langlands told Packaging News: "We witnessed a spike in electricity costs in Q4, the outlook for energy prices is easing into 2009, but we have had trouble recovering costs from customers."

The firm put up prices by £100 a tonne in January and by £80 a tonne in May. In October, it announced it was to stop using published LDPE price indices when negotiating sale prices for products which contain more expensive polymers.

Langlands refused to rule out further price increases.

BPI has announced 50 redundancies at various plants, costing the company £1m, bringing its total restructuring costs to £1.5m to date.

Langlands would not say whether any other closures or redundancies were being considered. "We continue to review all options to keep our cost base as low as possible," he said.

The company has extended it banking facilities and agreed new facilities to replace its private placement which is due for repayment in July 2009. Its total available facilities are £100m, with a revolving credit element of £57.5m renewable in 2011 and asset finance of £15.5m repayable in up to five years .