Refocussed DS Smith sees volumes and revenues rise

In an interim management statement, the UK-based company posted a double-digit jump in packaging revenues - thanks mainly to prices rises in its materials labelled as a “recovery of substantial cost increases “ - ​plus a steady increase in sales volumes.

The firm announced earlier in the summer it would be selling off it office products wholesaling business Spicers to Unipapel for £200m to as part of a strategy to focus on supplying recycled packaging for consumer goods.

DS Smith said it was confident it would reach its financial goals this year.

Revenue and volume growth​

The company said its recently acquired French asset Otor – now renamed DS Smith Packaging France – continued to make a “strong contribution”.​

Overall, like-for-like packing volumes rises of 3 per cent since 30 April 2011 were in line with its forecasts, and the firm stressed it was making progress on improving its margins.

However, it said that working capital had fallen in absolute terms, year-on-year, despite Otor takeover and “increased raw material prices raising the value of inventories and debtors”.​

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Packaging​

Revenue from packaging climbed by 13 per cent over the period as the firm continued to recover the costs of soaring raw material cost from its customers.

It added that it wanted to complete “the process of recovering these cost increases by seeking to differentiate” ​the firm on aspects such as customer service and product quality.

Take up of its R-flute corrugated packaging remained strong in the UK and had seen growth in France. The company said two of its French plants had begun manufacturing the product.

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Cost savings​

DS Smith once again highlighted cost saving realized as a result of the Otor acquisition – with overall synergies expected to reach €13m.

Savings for 2011/12 were forecast to hit £6m (€6.8m) – as part of the initial economies realized by the French takeover as well as projected saving in its UK operations from procurement and other efficiency drives.

Outlook ​

The firm reiterated in confidence in its strategy – with its long term commitment to the fast moving consumer goods (FMCG) market through recycled corrugated packaging and collection of fibre at the expense of it paper manufacturing division.

“Our focus on FMCG customers is an important part of our strategy as the resilient demand for consumer goods reduces the volatility in the demand for our products,”​ said the company.

It added: “Despite the ongoing challenging macro-economic environment and the recent turmoil in global markets, we remain confident in the trading outlook for the year.”​