DS Smith upbeat about results
products wholesaler, has released an update prior to its year end
on 30 April 2003 results to say that it is expecting a
substantially better performance than was first imagined.
DS Smith, the international packaging manufacturer and office products wholesaler, has released an update prior to its year end on 30 April 2003 results to say that it is expecting a substantially better performance than was first imagined.
Since the interim results announcement in December, the group said that it has successfully continued the drive on operational performance against a background of weak demand in many of its markets. This has resulted in the group meeting its key objectives for 2002/03 of maintaining progress in packaging and improving profitability in office products.
Taking into account these considerations, the group's results for 2002/03 are expected to be substantially ahead of 2001/02 and in line with expectations. The company has recently completed the sale of three small businesses.
As indicated in the interim results announcement, the combination of weak demand for corrugated board in the major markets and the volatility of recovered paper prices has continued to create uncertainty for pricing. Paper prices softened around the turn of the year following a fall in recovered paper prices during the autumn. Subsequently, recovered paper prices have risen as a result of renewed demand from Asia and there has been some upward movement in paper prices on the continent. Weakening economic conditions in the UK and France have contributed to box prices coming under increased pressure since the beginning of the calendar year.
Despite these changing market circumstances, DS Smith's Corrugated and Paper operations have continued to perform solidly through focusing on cost control, productivity and customer service. Profits for 2002/03 are expected to be ahead of 2001/02.
Demand in liquid packaging and dispensing has remained relatively good and the Group has continued the development of its global business. Total Plastic Packaging profits for 2002/03 are expected to show a healthy advance over the previous year as a result of organic growth and acquisition.
In line with the group's ongoing strategy of streamlining its portfolio, three small peripheral businesses were sold during February 2003 for a total consideration of approximately £5 million. The businesses concerned were: Western Board, a manufacturer and converter of fibreboard; Spicer Hallfield, a manufacturer of photographic stationery; and Sorepa, a waste collection business in France in which DS Smith held a 60 per cent share. These sales will result in an exceptional charge of £8.4 million (€12m)in 2002/03, principally due to the write-back through the profit and loss account of £7.4 million of goodwill originally written off to reserves when Western Board was acquired in 1985.
DS Smith's Preliminary results for the year to 30 April 2003 will be announced on 26 June 2003.
