DS Smith profits fall, but packaging division remains buoyant
in its packaging business was more than offset by lower profits in
office products wholesaling business
DS Smith reported lower profits for the year to April as a recovery in its packaging business was more than offset by lower profits in office products wholesaling business.
Pretax profits before exceptionals and amortisation fell to £62.6 million (€96.5m), from £72.2 million a year earlier, while turnover rose 3 per cent to £1.44 billion.
Chairman Antony Hichens said packaging made good progress in the year, but he added: "It was disappointing that this was more than offset by lower profits in office products."
On the packaging side of the business, the company acquired two UK sheet feeders and eleven sheet plants from Danish food producer Danisco. This enabled the company to gain a greater presence in the growing lightweight specialty sheetboard market. Combining these operations with the company's existing operations also meant that it was able to rationalise its production base and reduce costs.
One of the biggest growth areas for the company was plastics packaging. This division achieved a 14 per cent increase in sales and a 37 per cent advance in operating profit, partly helped by a reduction in the cost of polymers.
Hichens said he expects the performance of the office products business to improve this year as a result of "decisive" actions to cut costs in the business. But he added that the rising cost of recovered paper is currently squeezing margins in the rest of the business.
"Nevertheless, I am confident that the steps we have taken to raise operational performance across the Group provide a sound basis for progress in the coming year."
