DS Smith 'excited' as it continues to expand
DS Smith updated the market on its trading for the period since 1 May on Tuesday, saying it continued to be “excited” by its prospects.
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The FTSE 100 company said its focus on sustainable packaging in “resilient and growing” sectors, including fast-moving consumer goods and e-commerce, was consistently driving market share gains.
It had also seen “good” like-for-like volume growth in the year-to-date, with progress in all geographic regions.
Recovery of input cost increases from earlier in the calendar year was said to be in line with the board’s expectations, with the consequent positive margin impact.
Cash flow had also remained a focus in the period, as the company maintain a “disciplined” approach to working capital and capital expenditure.
The directors said trading remained in line with their expectations.
Interstate Resources, the company’s North America paper and packaging division, continued to perform “very strongly”.
Integration continued to go well, and the board said it had added additional capacity and further enhanced its customer offer via the acquisition of Corrugated Container Corporation, which completed on 1 June.
The board said it was “delighted” by the customer reaction, with a number of major customers seeking to partner with DS Smith for their packaging solutions in both Europe and the US.
Looking at Europe, on 4 June the company announced the proposed acquisition of Papeles y Cartones de Europa for €16.80 per share, and an implied enterprise value of €1.9bn.
The required regulatory approval process was said to be progressing “as expected”, and DS Smith anticipated completion in the fourth calendar quarter of 2018, as it had previously indicated.
Preparation for integration was continuing “at pace”, with the board saying it looked forward to welcoming Europac to the DS Smith group.
In June the company also announced a strategic review of its plastics division.
Progress had been positive, with the board promising a further update as appropriate.
“I am pleased with our momentum in the year to date, in a period when we also announced a significant acquisition and associated equity fundraising to expand our position in the important Iberia region,” said DS Smith group chief executive Miles Roberts.
“The corrugated packaging industry continues to demonstrate excellent growth prospects, driven by changing shopping habits, e-commerce, and the ever-increasing relevance of sustainability.
“DS Smith is in a strong position, as a market leader, to capitalise on these opportunities, and the board looks to the future with confidence.”