Rexam on track to complete a merger with Ball by June end

Drinks can maker Rexam said it was on track to complete a merger with American packaging company Ball by the end of June, as it it unveiled flat annual profits. The FTSE 100 company made £362m in underlying pre-tax profits in 2015, an increase of 1pc on last year, driven by rising sales and higher volumes in Europe, Africa, the Middle East and Asia.

The company's strong growth in the Middle East was boosted by its recent acquisition of United Arab Can Manufacturing, while falling aluminium prices - the main raw material used in producing cans - also provided a helpful tailwind.

However, restructuring charges and costs related to the forthcoming merger with Ball meant that actual pre-tax profits fell by 27pc to £250m.

American-based drinks can manufacturer Ball is in the process of acquiring Rexam and the deal is expected to complete in the first half of 2016. As part of the acquisition, the two companies are selling £1bn worth of assets to satisfy US competition authorities. The combined group would have 22,500 employees and £10bn in annual turnover, providing cans for beverage giants such as Heineken and Coca-Cola.

Rexam, which produces billions of cans for markets across the world, said that the outlook for the year was "challenging", adding that it continues to expect "low single digit growth in global can volumes".

Graham Chipchase, Rexam's chief executive, said the company's customers were under pressure as consumers continue to rein in their spending. This, combined with heightened competition in the sector, was pushing down market prices in Europe.

In response, Rexam has cut costs, but Mr Chipchase said the proposed merger with Ball would create an industry giant better placed to tackle the challenges. He said: "Rexam's proposed combination with Ball will create a global packaging leader...able to respond to changes in the industry environment in a faster and more effective manner."

In North America, consumers drink on average 315 cans of beverages a year, the highest in the world, and Rexam has a 20pc slice of this market.

However, the company said it struggled in the region last year, due to a decline in demand for carbonated soft drinks. In response to changing consumer tastes, Rexam is diversifying its portfolio by foraying into other product areas, such as craft beers, tea and energy drinks.

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