(Reuters) - Europe’s biggest plastics packager RPC Group Plc (RPC.L) said pressure from investors was preventing it from pursuing some growth opportunities, sending its shares down nearly 8 percent.
The British company has been investing heavily to take advantage of strong demand in China as well as produce more recyclable plastics, stoking fears that the higher spending will hit its cash flow.
The plastics industry is facing tighter regulation in Europe and elsewhere due to environmental concerns, with China this year banning lower-grade materials for recycling.
“Pressure on the company’s market valuation and differing investor views on the appropriate level of leverage is constraining the Group’s ability to pursue some attractive opportunities for growth,” RPC’s Chairman Jamie Pike said on Wednesday.
The company, which has spent over $1.5 billion on acquisitions in the past two years, said it would prioritise the proposed disposal of some non-core assets as it looks to generate capital for business expansion or to return money to shareholders.
Brokerage Jefferies said there was some disappointment as the company did not announce a buyback. The brokerage had expected a 100-million pound buyback.
RPC's shares were down 6.7 percent in early trading and the stock sat at the bottom of the FTSE Midcap Index .FTMC.
The company said profitability and cash flow development were in line with its expectations, but did not provide numbers.
Revenue rose 5.8 percent to 964.7 million pounds in the quarter ended June 30, helped by its acquisition of Astrapak business in 2017 and favourable polymer prices.
Reporting by Muvija M and Justin George Varghese in Bengaluru; Editing by Saumyadeb Chakrabarty