DS Smith profits surge
Monday, December 9, 2013
DS Smith posted a 52% jump in pre-tax profit and a 25% increase in revenue in its half-year results.
The packaging giant gained market share and boosted its profit margins in the six months to 31 October 2013, benefiting from a full six-months effect of its acquisition of SCA Packaging in July 2012, rather than just four months of its effect during the same period last year.
Pre-tax profits jumped to £85m (2012: £55.8m) on revenues of £2.1bn (2012: £1.7bn). Adjusted operating profit experienced 31% growth to £160m (2012: £122.3m) while the company increased its interim dividend from 2.5 pence per share to 3.2 pence.
Performance in the UK however, was disappointing with revenue down 1.9% from £490.3m to £480.8m in the period, although operating profit was up 9.5% from £25.3m to £27.7m during the period.
The company said the fall in revenue reflected the disposal of two sites required as part of the SCA Packaging acquisition, as well as the tough economic and trading environment. Meanwhile, the improved profit margin was attributed to improved paper pricing and the effects of an efficiency drive at the firm’s Kemsley mill in Kent.
Other regional divisions, including Western Europe, Northern Europe and Central Europe & Italy, all experienced strong revenue growth and surging profits due to the company's expanded presence in those areas as a result acquiring SCA.
DS Smith chief executive Miles Roberts said: "We are encouraged by the strong results announced today and the continued delivery of our strategy from our sustainable business model.
"The good volume growth reflects market share gains from a strengthened customer proposition, driven by innovation and removing complexity and cost from our customers' supply chains," he added.
“At the same time as gaining share and growing volumes, we have also improved our EBITA margin, despite the headwind, due to recent input cost increases that were being recovered, as expected, with the usual lag.
“We are, therefore, pleased with group trading in the year to date. We continue to expect further good progress over the remainder of the year, despite ongoing challenging market conditions, and the board views the future with confidence," he said.