DS Smith pleased with second half performance

DS Smith updated the market on its trading for the period since 1 November on Wednesday, with the board reporting “good progress”, reflecting the increasing relevance of sustainable packaging and its customer offering.

The FTSE 100 firm said box volume growth remained “strong”, continuing the positive trend seen in the first half of the year, and reflecting ongoing good progress with its multi-national and e-commerce customers.

Growth was delivered across all geographies, with Smith saying its expertise in e-commerce, combined with a strong Christmas trading period for online retail sales, contributed to continued market share gains.

Integration of the North America business was said to be going “very well”.

The business reportedly continued to perform ahead of initial expectations, with packaging volume growth significantly ahead of the group average rate and improved paper productivity.

DS Smith said the recovery of recent increases in paper prices was also progressing well, as the board expected.

That, together with operational leverage coming from strong top-line growth, meant that return on sales was expected to increase in the second half as compared to the first half.

The full year return on sales was expected to be in line with that for the prior year, the board added, with trading overall in line with internal expectations.

DS Smith also confirmed that it completed the acquisition of Ecopack and Ecopaper - a leading integrated packaging and paper group in Romania - on 6 March.

The board said the acquisition would “significantly” enhance kits capacity to serve customers in the high-growth region, as well as support its wider substantial eastern European presence.

It said the acquisition, for an enterprise value of €208m, was expected to be earnings-enhancing immediately and was consistent with the group's medium term financial targets.

“I am very pleased with how our strategy is delivering for customers and producing strong results,” said group chief executive Miles Roberts.

“We continue to gain market share by delivering packaging that adds value for our customers, as they look to improve the efficiency of their own operations.

“The excellent reaction from US customers reflects the differentiated offer we bring, including our expertise in retail ready packaging and e-commerce.”

Roberts said that at the same time, the benefit of a global supply platform for paper and fibre was being seen in the improved operational efficiency of its US assets and greater coordination across the group.

“We are excited by the structural drivers supporting the growth of sustainable packaging and the opportunities for DS Smith.

“Our outlook therefore is positive and we remain confident in the future.”