DS Smith posts revenue and profit growth in half-year results

By Richard Stuart-Turner, Monday 12 December 2016

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DS Smith has recorded significant jumps in both revenue and pre-tax profit in its half-year results.

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Roberts: "The business has continued to demonstrate momentum"

The London-headquartered packaging giant reported revenue of £2.4bn in the six months to 31 October 2016, up 21% on the first half of 2015. The company said this represented a 7% increase under constant currency conditions.

The firm’s pre-tax profit jumped by 60% compared to H1 2015 to £146m – up 32% under constant currency conditions.

In the UK, revenues jumped by 5% to £466m, from £444m in H1 2015 though adjusted operating profit fell by 4% from £47m in H1 2015 to £45m.

The company attributed the results to its strengthened business portfolio, which saw it expand its pan-European POS and display capability.

In the six-month period covered, the firm acquired and integrated businesses including POS specialist Creo in the UK and Denmark-based POS printer Deku-Pack.

It also opened a new plant in Erlensee, Germany, acquired P&I, a specialist corrugated display business in Portugal, and completed its acquisition of Portugal-based corrugated packaging firm Gopaca.

Additionally, it has just announced its acquisition of Parish Manufacturing, a US bag-in-box plastics business.

DS Smith chief executive Miles Roberts said: “This half year has been another period of consistent delivery across the whole business. Volumes have grown as our high quality, innovative service has continued to delight our customers, particularly those who require a pan-European approach.

“This, combined with strong results from businesses acquired last year, the benefit of our global procurement platform, and the continued roll-out of performance packaging, has resulted in another period where we have delivered against all our financial KPIs.

“The business has continued to demonstrate momentum and has performed well despite the challenging market, which is a demonstration of the strength of our business model.”

In a call to investors when the results came out last Thursday (8 December), Roberts referred to the six-month period as “a challenging economic environment at a macro level”.

He said: “If we look behind the numbers, we really see a continuation of the generally weak spending power of the consumer. And obviously, the significant currency movements that have occurred have exacerbated some of the underlying raw material cost increases, not just for ourselves, but at a macro level.

“Of course, we've designed a business model to withstand exactly these sorts of pressures and that's why we spoke six years ago about having the balance of the business that we do have, so that we can weather difficult economic conditions."

Looking ahead the board said the company’s outlook continues to remain positive as it continues to expand and strengthen its market position, particularly in the fast-growing e-commerce and POS and display categories. The board has increased the dividend by 15% to 4.6p per share.

DS Smith’s share price rose from 395.6p to a high of 424.1p last Thursday and has since settled down to 419.6p at the time of writing.

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