DS Smith purchases Creo and posts strong annual growth

By Max Goldbart, Thursday 23 June 2016

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DS Smith has acquired POS specialist Creo from investment management company Writtle, its seventh acquisition since May 2015.

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DS Smith chief executive Miles Roberts

The deal was announced the same day (22 June) that it announced the acquisition of Portugal-based Gopaca, a corrugated packaging business. 

The purchase of the 285-staff company also comes just weeks after DS Smith acquired 270-staff TRM Packaging, to expand its corrugated packaging operations in the north of England. 

Writtle executive chairman Robert Essex said: "Creo's FMCG clients increasingly want a pan-European supplier base so we either build or acquire our own manufacturing facilities, or join forces with someone who has them already.

"We have had a good experience with DS Smith, having sold a packaging consultancy to them in 2014, so it seemed the logical decision."

Writtle sold packaging consultancy Less Packaging to DS Smith in November 2014.

In its annual results published today, DS Smith said Creo, based in the South East, can "significantly build" on its capability within the UK market, especially in the FMCG, retail and media markets. 

It announced another year of strong growth after a series of global acquisitions.

The London-listed company reported an increase in turnover of 6%, as it crossed the £4bn mark, reaching £4.07bn, up from last year’s £3.8bn.

Adjusted operating profit (£379m) rose by 13% and adjusted pre-tax profit (£332m) rose by 12%. However, pre-tax profit growth was down on last year's 20% figure.

The group puts the strong return down to growth in the organic corrugated box market of 3.1%, strong regional growth and increased interest from pan-European customers. The acquisitions were also continually highlighted as boosting performance.

DS Group chief executive Miles Roberts said he was "delighted" to report on another year of strong growth and that "strong financial displicine" had allowed the group to deliver on its priorities. 

Additional sales from the group's five acquisitions in the 12 months from April 2015 totalled £433m and, according to DS Smith, expanded its presence in 13 countries. The acquired businesses were attributed to supplementing 6% (£20m) of its adjusted operating profit.

In May 2015, DS Smith acquired Duropack, a corrugated packaging business based in Austria comprising 14 sites and two paper mills.

A strong revenue increase in the Central Europe and Italy region is attributed to the Duropack acquisition, with revenue increasing by 36% to £1.02bn and adjusted operating profit increasing by 42% for the region.

In July 2015, it bought the corrugated arm of Spanish-based Grupo Lantero, strengthening its operations in Spain, and gaining seven sites across the Iberian Peninsula. This followed on from 2014’s acquisition of Spanish-based Andopack.

It also bought Greece-based Cartonpack and Turkey-based Milas Ambalaj in October 2015 and January 2016 respectively. 

Revenue in the UK fell by 5% from £905m to £864m, while operating profit rose far more narrowly (5%) than global operating profit, from £81m to £85m. The group puts this down to the closure of the Wansbrough paper mill in Somerset in December 2015.

It also sold StePac, a specialist plastic packaging business, to Johnston Matthey, in order to focus more on the corrugated packaging side of its operation.

Its interim results, published in December 2015, saw a 26% drop in pre-tax profits. 

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