DS Smith reports increase in recycling revenue

Overall revenue for the companys UK packaging division which includes DS Smith Recycling, alongside paper manufacturing and the design and manufacture of corrugated packaging increased by 5%, despite a disappointing results in the paper business. Revenue rose from 917.7 million in 2010/11 to 960.2 million in 2011/12.

The review from group chief executive Miles Roberts, states: The year has been characterised by a robust performance from the corrugated packaging and recycling businesses and firm cost control resulting in an improvement in operating profit of 19 per cent and an improvement in margin of 80 basis points, despite significant headwinds from the paper manufacturing business, where market conditions have been volatile, particularly in the second half of the year.

In recycling, which includes all recycling operations including those outside the UK, overall volumes of fibre collected increased by 3 per cent to 1.8 million tonnes. We are now operating in Poland where we have a sole fibre and waste supply contract with Tesco, collecting from 400 locations across that country. While the volumes from this are modest in the context of the overall business, it gives us an excellent platform for growth in the region.

Revenue in the recycling business increased significantly and margins remain good while return on average capital is excellent, reflecting the quality of service we provide.

Revenue

The DS Smith Group as a whole has continued to grow with a 12% increase on revenue from 1,759.3 million in 2010/11 to 1,969.4 million. In addition profit before tax was up 44% from last years figure 76.7 million to 110.2 million.

In a bid to grow its packaging and recycling division further, the Group is set to acquire the cardboard side of SCA Packaging, a subsidiary of Swedish group SCA (see letsrecycle.com story).

The deal, which was cleared by the European Commission last month, is expected to be completed this Saturday (June 30). The deal is set to see DS Smith Recycling take over SCAs materials recycling facility (MRF) in Southampton as well as its 50% share in the Casepak MRF in Leicester.

Commenting on the Groups performance in 2011/12, Miles Roberts, chief executive, said: 2011/12 has been a pivotal year for DS Smith. Building on the success of the previous year we further improved the operational and financial performance of the business, with substantial improvements in revenue, growth, profitability, and returns on capital. Alongside our organic growth and business improvement we also significantly re-shaped the Group in line with our strategic aim to become the leader in recycled packaging for consumer goods.

Mr Roberts added: The full year benefits from our 2010 Otor acquisition are ahead of our original plans, and the integration of the business has been well received by our customers across Europe. For the year 2012/13 we have much more to accomplish with the planned completion and integration of the SCA Packaging acquisition, which will transform our pan-European market position.