DS Smith trades in line as price rises offset higher costs

DS Smith said it was trading in line with expectations as higher volumes and price rises more than made up for increased costs.

The packaging group said volume growth since the start of November was driven by demand from fast-moving consumer goods companies. The FTSE 100 group predicted like-for-like growth in mid-single digit percentages for the year ending in April.

Input costs including energy and labour rose though the impact of higher energy prices was limited by greater efficiency and hedging, DS Smith said. High levels of hedging were maintained into the next financial year.

The company said it was recovering costs by raising prices and that it expected this to continue after the end of April. Free cash flow is strong and cash conversion will be more than 100% for the full year.

DS Smith said its only involvement in Ukraine and Russia is a minority stake in a Ukrainian business with limited sales in Russia. Production at the operation is suspended and the contribution to last year's results was £4m after tax.

Miles Roberts, DS Smith's chief executive, said: "Despite the increasing macro-economic and geo-political uncertainty, the outlook for the year remains unchanged by recent events with the second half of the year continuing to show good momentum.

We have successfully managed the inflationary cost pressures experienced in the market, and this, together with raising packaging prices and growing volumes, is driving the anticipated increased profitability and cash generation."