DS Smith revenue and profit continues to grow

By Richard Stuart-Turner, Thursday 13 June 2019

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Packaging giant DS Smith has reported revenue and profit increases as its recent acquisitions start to pay off alongside organic growth.

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Roberts: "It’s been a year of significant development for DS Smith"

In its full-year results for the 12 months to 30 April 2019, announced today (13 June), the London-headquartered business said its adjusted pre-tax profit was up by 31% year-on-year to £569m.

The company’s pre-tax profit climbed by 35% to £350m while its adjusted operating profit grew by 28% to £631m. Revenue grew by 12% to £6.18bn, from £5.77bn last year.

DS Smith chief executive Miles Roberts said: “It’s been a year of significant development for DS Smith. We’ve seen the continued very successful integration of our North American business that we acquired in 2017.

“But we’ve also seen a huge expansion of our presence in the very exciting Iberian market with the acquisition of Europac, and the first indications from that acquisition are very positive.

“We’ve also really focused on the group behind corrugated packaging by disposing of our non-core plastics division. In that year of development, we’ve also delivered record profits – the results are up substantially, the margin is at a record high, the cashflow has been strong and we’ve taken market share across Europe in our core business.”

Organic growth during the year was attributed to increases in prices reflecting rises in underlying costs, plus a contribution from volume growth in corrugated boxes, partially offset by reduced volume in external recycling and paper sales reflecting greater matching of its paper manufacturing with the requirements of its packaging operations.

Organic corrugated box volumes grew by 2.4% across the year, excluding Europac, which the company said reflected a strong H1 period and a lower growth rate through H2 due to some weakness in export-led markets, including Germany, as well as some capacity constraints in North America.

“While volatility in the macro-economic environment and input costs remains, our focus on pricing discipline, operating efficiencies and cash flows supports our expectations of further good progress in the coming year,” said Roberts.

In the UK the company’s sales increased by 4% year-on-year to £1.13bn while adjusted operating profit was up by 11% to £121m.

The company said its UK corrugated packaging business “performed very well despite the uncertain political and economic backdrop”, with “very good” volumes driven by both FMCG and e-commerce.

The group said it has considered the potential business impact of Brexit, and highlighted its plans for contingency levels of spare parts and “other essential items for continuous running”.

“As such, while not immune from disruption that might occur in the event of a disorderly Brexit, including the impact of changes in order patterns from customers, we expect disruption to our own operations to be relatively contained,” the company said.

The board declared a final dividend per share of 16.2p, up 13% year-on-year.

DS Smith’s share price fell by nearly 4% to 333.21p in early trading, but then jumped by 8% to stand at 360.2p at the time of writing.

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