LONDON — Rexam plc continues to trim its food and packaging unit, while at the same time beefing up its beauty division.
The London-based firm announced the £7.6 million ($12.5 million) sale of its printed polyethylene and paper bag business, Rexam Flexibles Welton Ltd., to British Polythene Industries plc.
Rexam also announced that it is expanding its beauty division in Asia with the acquisition of a one-third stake in Der Kwei Group, a Taipei, Taiwan, cosmetic and toiletry products molder.
At the end of last year, Welton of Midsomer Norton, England, saw its retail carrier-bag business badly hit by price-cut Asian imports, according to BPI of Greenock, Scotland.
This will result in a $21.2 million drop in Welton's 1998 sales, said Rolf Borjesson, Rexam's chief executive officer. He added that the division has a better chance with BPI, which is Europe's leading PE film producer and converter.
The Welton businesses, which employ 270 and traded under the names Rexam Flexibles Welton and Rexam Retail Carriers, reported nearly $2 million in profit from sales of more than $60 million in 1997. A year earlier, according to BPI, Welton's profit was $2.93 million from sales of $67 million.
Welton is part of Rexam's food and beverage packaging sector, and was among the divisions subject to radical reorganization.
Rexam paid $41.3 million for the stake in Der Kwei, with an agreement that may lead to a majority stake and eventually 100 percent ownership.
Der Kwei makes and exports plastic lipstick cases, mascaras, compacts, bottles and closures at five plants in Shenzhen and Shanghai, China; Taipei; and Jakarta and Surabaya, Indonesia. A sixth plant is set to open in Tianjin, China, this year, according to Rexam. Der Kwei employs 3,600.
China rapidly has become Der Kwei's manufacturing center. Last year production there accounted for 70 percent of total output. In 1996, the Asian firm achieved pre-tax profit of $12 million on sales of $83 million.
The final cash price for Rexam's share will be determined when Der Kwei's 1997 audited accounts are available. Under the deal, Rexam assumes responsibility for 65 percent, or $54 million, of the Asian molder's total debt.
Chun Te Wang will remain chief executive officer.
Rexam said the recent devaluation of Asian currencies has made the cost savings of the deal even more attractive.