Like-for-like volumes in corrugated packing are up three per cent and in line with group targets, which the firm said reflected its resilient fast-moving consumer goods customer base. At the same time, the group continues to make progress on margins.

Like-for-like revenue growth across all the group’s packaging businesses was increased 13 per cent, reflecting the recovery of substantial cost increases as well as underlying volume growth. The firm said it was focused on completing the process of recovering these cost increases by seeking to differentiate itself through high standards of service, quality and innovation.

Smith also reported that conversion of profit into operating cash flow has been robust due to a continued focus on working capital, which has fallen in absolute terms (year-on-year) despite both the acquisition of Otor and increased raw material prices.

Trading during the business benefited from the inclusion of Otor (now DS Smith Packaging France), which performed well both in terms of revenue growth and delivery of previously-announced, and ongoing, cost savings of €13 million. The firm also continued to make good progress with procurement and UK efficiency savings. Combined these programmes are on track to deliver £6 million in total cost savings in 2011.

Smith said it remains confident in the trading outlook for the year.

Shares in the firm were trading for 199.5 pence each at lunchtime today, some 1.3 per cent  on their opening price.

It will be paying HK$418.6 million or approximately US$53.7 million to take its voting interest in Omnicorp to 53.7 percent of the enlarged share capital from the current 19.9 percent stake.

Sino-Forest also holds HK$212.3 million of existing convertible bonds of Omnicorp that were acquired in November 2007 and February 2009. Assuming full conversion of the convertible bonds and the completion of the subscribtion agreement, Sino-Forest will own approximately 60.1 percent of the enlarged issued share capital of Omnicorp.

Omnicorp has a 60.4 percent ownership in Greenheart Resources Holdings Ltd ("Greenheart"), and Sino-Forest, through its wholly owned subsidiary Sino-Capital Global Inc., owns a 39.6 percent minority stake. As one of the largest forest concession owners and operators in Suriname, South America, Greenheart owns a 178,000-hectare hardwood concession with a harvestable standing stock volume of approximately 4.4 million cubic meters.

Sino-Forest chairman & CEO Allen Chan said, "We are pleased to expand our existing partnership with Omnicorp and look forward to sharing our operating expertise and R&D knowledge in sustainable forestry management with Greenheart. This collaboration will strengthen our supply of sustainable hardwood fibre at competitive prices to serve the increasing wood deficit in China and in turn deliver stronger shareholder value for Sino-Forest. At the same time, through low impact sustainable harvesting and continued adoption of CELOS best practices, we will endeavor to preserve and enhance Suriname's precious ecosystem."

Asian Plantation is paying approximately £2,116 per hectare, and will fund the transaction through a new £10 million debt facility provided by a local bank in Malaysia, with the remaining funds drawn from its existing cash resources.  Asian Plantation is paying £2.6 million now, with a further £1.3 million due before 30 December 2009 and the balance paid before 31 January 2009.

The 5,850 plantation consists of around 1,000 hectares of planted land with palm tree approximately three years old. It is Asian Plantations intention to plant the remaining acreage over the next 12 months, subject to “the availability of sufficient working capital”.

For the year ended 31 December 2008, the plantation generated negligible revenues and had gross assets of £8.92 million.

The plantation is located only five kilometres from Asian Plantations existing acreage.

The palm oil plantation developer said the acquisition offered a number of strategic benefits to the company, including increased scale, a strong platform for future growth and immediate revenue generation.

"We are excited to have secured this new parcel of land, which has tremendous operational synergies with our existing estate operations and which are located in close proximity to one another,” Graeme Brown, Joint CEO, commented. “Through our long standing local relationships and on-the-ground presence, we were able to secure the parcel in a negotiated, non-competitive situation, which demonstrates our ability to source acquisition opportunities for the Company, as well as securing attractive local currency bank financing, which we believe creates long term shareholder value."

Asian Plantation listed on AIM with 4,795 hectares of land zoned for palm oil plantation in Sarawak, Malaysia, and stated that it would use the proceeds to complete planting and development .

The headline cost savings represent the progress made on Smith’s ‘Group's Action Programme’, where a sustained reduction in working capital is contributing to lower debt levels and reduced financing costs.

Shares in the FTSE 250 listed, international packaging and office products wholesaler, have responded strongly following the statement, jumping 8% this morning.

The packaging business continues to face reduced activity levels, with statistics showing a reduction of 11% industry-wide European demand for corrugated packaging in the first half of2009. However Smith’s identified marked differences between market sectors within their overall operations. In their ‘UK Paper and Corrugated Packaging’ segment, demand for DS Smith’s new lightweight Corrugated Case Material (CCM) is strong, whereas ‘Continental European Corrugated Packaging’ segments have a greater exposure to the industrial market and it’s seen a substantial fall in volumes.

In their other primary operation, the demand in DS Smith’s wholesale office products across Europe is down by up to 20% depending on the country and product sector. Despite this relative group performance is more positive. With Q1 sales at ‘Spicers’ demonstrating good performance compared to the market. Profits in UK operations remain low, although the ‘Group's Action Programme’ has strengthened both its market position and cost base. Reduced gross margins in the wholesale division reflect a changed sales mix and pricing pressures.

Across DS Smith’s primary operations the outlook is mixed for the remainder of the year, there is concern surrounding the level of demand for the major market sectors, however the implementation the ‘Action Programme’ and the strong balance sheet, underpin the management's confidence in achieving its expectations for 2009/10.

It paid £3.25 million and will require an additional £3.5 million to bring the investments into production.

The acquisition completes the Brazilian charcoal strategy that it announced in July 2008. Currently the company has purchased properties for the strategy totaling approximately £8.5 million in land purchases and an equivalent amount estimated for plantation development.

Eucalyptus is the wood of choice for timber substitution and the charcoal industry in Brazil and the oil of the trees contain makes the wood highly flammable.

In the statement, the company confirmed that the first quarter of its 2008/09 financial year had been in line with management expectations overall, but that its operating performance had been hit by slowing demand and higher costs, especially at its UK operations.  

Overall, the weaker performance in the UK had been offset by solid results from its European businesses.   There were signs of weakness in some parts of the group’s European business however, with demand for corrugated boxes slowing, and a “significant” fall in prices across continental Europe.  On the flip side, the group saw good growth at its Polish business, strong sales in Italy and operational improvements at its French business.

Meanwhile, in Plastic Packaging, recent increases in the cost of polymer costs is being pushed through to customers; ands performance in the division was described as “encouraging”.  

Finally, in Office Products Wholesaling, electronic office supplies sales have are growing strongly, but the company witnessed a drop off in volumes of more ‘traditional’ office supplies.

“It is still early in the Group's financial year.  Despite the tough trading environment, the Group's good market positions, continued tight operational discipline and strong balance sheet underpin the Board's confidence in achieving a robust performance in 2008/09”, the company stated.

DS Smith also confirmed that it had renewed and increased its revolving credit facility to £287.5 million over five years.