Posted this morning, the results show revenues fell by 1% to £5.976 billion, while profit before tax fell to £231 million.
DS Smith put this down to the effects of the Covid-19 pandemic, which it said manifested in an initial fall in packaging volumes and significant volatility in the cost of various raw materials.
According to DS Smith, the company then “invested in safeguarding the health and safety of our colleagues, and in the security and operational effectiveness of all our sites. This was in addition to carrying additional costs from production underutilisation”.
The effect of the above of this was a “significant fall in profitability during the first quarter of the year”.
However, the company says it is “well positioned” to recover.
DS Smith said all its sites were fully operational and started to see a good gain in market share, with increasingly positive volume growth, primarily in the e-commerce sectors, during the second quarter of the year.
The company said “this was combined with a lessening in the volatility of input costs” and the second quarter of the year therefore showed a “significant improvement” in the run-rate of profitability over the first quarter.
The paper mill and recycling business also reported “strong demand” for packaging, accompanied by an increase in input costs, particularly in the fourth quarter of the financial year.
“Given the strong demand, and good levels of customer service, these costs are starting to be recovered with good initial progress,” the results read.
Miles Roberts, group chief executive, praised the work of the company’s 29,000 employees, saying they had gone “above and beyond what is required”, adding that the company was well positioned to capitalise on growth opportunities.
He said: “Our teams in over 300 sites have gone above and beyond what is required to keep delivering for our customers, supporting all our communities and, most of all, taking care of each other.
“We invested heavily to keep all of our people safe and all of factories open throughout the pandemic and this enabled us to build good momentum through the year after a challenging Q1. The growth drivers of e-commerce sustainability and plastic-free packaging have accelerated over the last twelve months and we are very well placed to capitalise on this growth.
“We have worked hard over many years to focus our business purely on fibre-based packaging and this differentiation is clearly recognised by our customers.”
DS Smith noted that while uncertainty remained in the overall economic environment, demand remained strong and “good progress” was expected this year. The company pointed to opportunities provided by the pandemic.
Whilst the business has seen reduced profitability over the last 12 months, DS Smith “firmly believe that we exit 2020/21 stronger”, focused on the “accelerated opportunities a post-Covid-19 world offers and that our customers will continue to recognise this going forward”.
It also said the 2021/22 financial year had “started well”.
The results this morning come after the company said in July 2020 there the pandemic only had a “limited” impact on the company (see letsrecycle.com story).