DS Smith sees improved Q2 performance

Richard Stuart-Turner
Tuesday, November 3, 2020

DS Smith has reported an improved performance in the second quarter of its current financial year, with a return to growth for its corrugated box volumes.

Roberts: Pleased with DS Smith's H1 performance
Roberts: Pleased with DS Smith's H1 performance

In a pre-close trading update related to the half-year to 31 October 2020, the London-headquartered packaging giant said its market trends and performance “have continued to improve since our trading update of 8 September 2020 with our expectations for overall financial performance unchanged”.

The company said its corrugated box volumes in and throughout Q2 have returned to growth versus the comparable prior year period “following the challenges of Q1”. It expects volumes for its H1 period overall to be around 1.5% lower than the prior year H1.

The regional trends outlined by the business in September have also continued, with positive corrugated box growth seen in both Europe and the US, which it said reflected ongoing market share gains, in particular with its large FMCG and e-commerce customers.

The company added it remains highly focused on costs and margin, together with robust cash generation, as it continues to see the anticipated year-on-year modest price deflation in box pricing.

The business said that while its profit for H1 will be lower than the comparable prior year period due to the coronavirus pandemic, it has seen “significant improvement” in Q2 compared to Q1, on both sides of the Atlantic.

This, it added, reflects the benefit of improving packaging volumes and reduced old corrugated cases (OCC) pricing, combined with the Q1 weighting of the additional coronavirus disruption costs previously identified.

“I am pleased with the performance of the group in the first half of the year, in what remains a difficult and uncertain economic environment caused by Covid,” said DS Smith group chief executive Miles Roberts.

“We continue to be excited by the underlying drivers of demand for our sustainable corrugated packaging and our leading offerings for FMCG and e-commerce customers, together with our focus on cost efficiency and cash generation, give us confidence in the business going forward.”

Given its improved performance in Q2, DS Smith said it remains its intention to declare a dividend for the six-month period.

DS Smith's results for the half-year to 31 October 2020 will be released on 10 December 2020. The company's share price climbed by nearly 3% in early trading, to 300.1p, but has since settled back down to 291.7p at the time of writing.

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