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DS Smith sees strong volume, revenue growth in first half, although profits fall slightly

The FTSE 250 listed packaging firm saw its pre-tax profit fall to £144mln for the six months to October 31, down from £146.0mln a year earlier, mainly due to an increase in one-off costs
Corrugated cardboard
However, first half revenue rose by 14% at constant currency and 19% at reported rates to £2.80bn

DS Smith PLC (LON:SMDS) has reported strong volume and revenue growth in the first half, although profits fell slightly, and said it remains confident in the outlook for the business.

The FTSE 250 listed packaging firm saw its pre-tax profit fall to £144mln for the six months to October 31, down from £146.0mln a year earlier, mainly due to an increase in one-off costs to £40.0mln from £21.0mln last year.

READ: DS Smith says it has made “an encouraging start to the year"

The group’s acquisition costs rose to £18.0mln from £3.0mln related to the deals for Interstate Resources and DPF Groupe and pending takeovers of Ecopack and Ecopaper.

However, it added, first half revenue rose by 14% at constant currency and 19% at reported rates to £2.80bn, from £2.36bn a year earlier.

DS Smith said the growth in revenue was primarily due to volume growth in corrugated boxes in Europe, which rose 5.2% organically, well ahead of its target, as well as the contribution from acquisitions and increased selling prices.

The company said all regions are growing in line with expectations as the recovery of paper prices continues as expected.

It added that the second half has begun with good momentum and volume growth as it recovers costs "as planned", although input cost pressures remain.

CEO sees exciting opportunities for growth

Miles Roberts, the group‘s chief executive said: "The strong customer demand has driven performance and our operating margin is in line with our expectations, despite the substantial input cost pressures in the period, which we continue to recover as planned."

He added: "We continue to see exciting opportunities for growth, both in Europe and in North America, and, accordingly, the Board remains confident about the outlook for DS Smith.”

The group raised its interim dividend by 7.0% to 4.9p a share, up from a 4.6p payout a year earlier.

In morning trading DS Smith shares were 3.3%, or 18p higher at 557p.

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Newswire
September 06 2011

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