viewDS Smith plc

DS Smith slips as it reiterates ongoing macro uncertainty in final results

The packaging giant said it would not be immune from any disruption that may occur from a disorderly Brexit as it could impact order patterns from its customers

For the year ended 30 April, the firm reported an adjusted pre-tax profit of £569mln, up 31% on the prior year

FTSE 100 packaging giant DS Smith PLC (LON:SMDS) has reiterated ongoing macro uncertainty and expected disruptions from Brexit as it delivered final results that were in line with forecasts.

For the year ended 30 April 2019, the firm reported an adjusted pre-tax profit of £569mln, up 31% on the prior year, while revenues climbed 12% to £6.2bn.

READ: DS Smith says financial performance in line with its expectations but flags up uncertain economic conditions

The figures were more or less in line with predictions from analysts at broker Numis, who had forecast an adjusted pre-tax profit of £556mln and revenues of around £6.2bn.

The group also reported 2.4% organic growth in corrugated box volumes despite a lower growth rate in its second half due to weakness in its export-led markets such as Germany and capacity constraints in North America.

The company also hiked its final dividend to 11p per share from 9.8p the year before, taking the total divi to 16.2p from 14.4p.

Looking ahead, DS Smith said the underlying demand drivers for its packaging gave the firm confidence in ongoing volume and market share growth, with the weakness in its export-led markets expected to improve over the current year.

Miles Roberts, chief executive, added that the group’s “growing scale and strategic progress” in its key markets meant it was able to raise its medium-term return on sales target to between 10% and 12% from 8% to 10% previously.

“DS Smith is increasingly well-placed to capitalise on rising consumer demand for sustainable corrugated packaging as well as greater convenience from both e-commerce and more traditional retail channels”, the CEO said.

However, the company continued to note volatility in the macro-economic environment and input costs, adding that it would not be immune from any disruption that may occur from a disorderly Brexit as the UK’s exit from the EU could impact order patterns from its customers.

In a note, analysts at Peel Hunt left their ‘buy’ rating and 460p target price for DS Smith unchanged, saying the results have come in “very much as expected”.

In early trading on Thursday the shares were down 2.8% at 335.3p.

Quick facts: DS Smith plc

Price: 382.9 GBX

Market: LSE
Market Cap: £5.25 billion

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