DS Smith remains cautious as H1 profit exceeds expectations

The corrugated packaging specialist reported in a trading update today that this reflected a slower erosion of selling prices in packaging and a faster reduction of group operating costs than originally expected.

It is predicted that the company will meet its Group Action Programme commitment to cut costs of £26m across the group by the end of this financial year.

However, DS Smith stated that it remained cautious about the second half of the year due to the expected impact of input cost increases.

The company has already started implementing price increases to recover these costs, but the speed at which these are recouped will impact on H2 results.

DS Smith's packaging business performed better than expected according to the statement, but has had to inform customers of corrugated case material price increases.

Liquid packaging and dispensing systems and its restructuring last year have helped buoy the performance of the plastic packaging business.

In June, chief executive Tony Thorne said the company's strategy in the UK was to "maintain our leadership positions in all three parts of the paper and corrugated supply chain, through both organic development and acquisition" after DS Smith posted an 85% drop in full-year pre-tax profit.

DS Smith will announce its results for the six months to the 31 October 2009 on 10 December 2009.

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