DS Smith PLC (LSE:SMDS) described its first-half performance as “excellent” after it achieved strong revenue and profits growth despite a volatile market environment and forecast full-year results above its previous expectations.
The packaging group said revenue for the six months to 31 October 2022 amounted to £4.29bn, a jump of 26% at constant currencies compared with the same period last year, after a small fall in box volumes was offset by higher selling prices.
Adjusted operating profits leapt 49% to £418mln. In an October trading update, the company had forecast operating profits of at least £400mln.
It celebrated the strong numbers with a 25% increase in its interim dividend to 6p per share.
"The performance during this six-month period has been strong, benefiting from our constant focus on our customers' evolving needs during this time of significant economic volatility. This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios,” commented DS Smith chief executive Miles Roberts in the results statement.
“We are particularly pleased with the performance of the Southern Europe region that continues to deliver major benefits from the acquisition of Europac in 2019," he added.
However, the company noted that the overall market had been “worse than we originally expected”, which resulted in a 3% drop in box volumes reflecting strong comparatives, a weaker-than-expected industrial sector and economic challenges, particularly in the UK and Germany.
Although the market remains challenging, volumes are still expected to improve in the second half of the year, it said.
Costs increased by £779mln in the period driven by significantly higher input costs, supply chain issues and general availability.
Roberts said that although the macro-economic outlook for the rest of the year “remains challenging”, DS Smith’s “excellent” customer base, its “strong” balance sheet and the current momentum in the business “mean we now expect FY23 performance to be ahead of previous expectations with H2 being consistent with H1".