DS Smith reports positive trading as box volumes boom
Tuesday, September 7, 2021
DS Smith said its trading has continued to progress well over the last few months, with strong growth seen in box volumes.
In a trading update released today (7 September) ahead of its AGM, for the period since 1 May 2021, the London-headquartered packaging giant said trading was in line with the trends and momentum described in its full-year results in June.
The company said its box volumes have grown “very strongly” versus the comparable prior year period and the comparable period in 2019.
While this growth has been seen across all parts of the group, DS Smith said it has been “especially strong” in the US and Southern Europe, and with its large FMCG multi-national customers.
The business said its industrial customers have also seen “significant increases in demand” but that this represents a relatively small proportion of its overall customer portfolio.
Input costs have continued to rise, it added, with notable increases in the cost of energy and transportation. Combined with the cost of OCC remaining high, this has resulted in further significant increases in the price of paper.
But DS Smith said it has seen “good progress” towards recovering these increases, given the strong demand for its packaging.
The company’s volume growth has also been driven by continued strength in the e-commerce and consumer sectors. It is supporting its e-commerce growth with investment in new technology and the further roll out of its digital platform.
DS Smith group chief executive Miles Roberts said: “I am very pleased with the progress made during the financial year to date. We have continued to build on our strong customer relationships resulting in excellent volume growth and good progress towards recovering the significant increasing costs of production through higher prices.
“Consequently, overall trading continues to strengthen in line with our expectations.”
He added: “The long-term structural growth drivers of e-commerce and sustainability have been accelerated by the effects of Covid.
“Over many years, we have built a business that is ideally positioned to benefit from these growth drivers. Accordingly, while the macroeconomic environment remains uncertain, we remain confident about the prospects for the business in this financial year and beyond.”
The group added the construction of its additional packaging manufacturing sites in Italy and Poland is proceeding to plan and they are expected to begin operations in Q4 this financial year. Both plants have already received advanced commitments from customers for over 50% of their capacity.
The new sites are in part being funded by the group’s proposed disposal of its non-core De Hoop paper mill in the Netherlands.
DS Smith’s share price climbed by over 2.5% in early trading this morning to 462.1p and had climbed again to 462.7p at the time of writing.