DS Smith sees efficiency opportunities in cost base

The update, published 8 September, said that performance has continued “in line with expectations” despite the “macro-economic” challenges of covid-19.

The company said that its corrugated box volume has improved over the period since the initial impact of Covid-19, and in August it saw “positive growth”, compared with August 2019.

DS Smith commented on the “impact of lockdowns on recycling infrastructure”. It also remarked on the spike in the value of used cardboard during the pandemic in April, saying this had a short-term impact but has now  “reduced to more normal levels”. Without giving detail, the statement also said that DS Smith continues “to see further opportunities in terms of efficiencies within our cost base”.

It also noted that its FMCG and e-commerce business has grown throughout the period, “demonstrating a consistently strong performance with multinational customers”.

North America

On the international front, the company is “encouraged” by the progress in North America, particularly in attracting new customers, including multinationals, to its Indiana plant.

DS Smith added that its supply chains have “remained robust” which has allowed its plants to remain operational.

The company said that the effect lockdowns had on recycling infrastructure and the associated short-term impact on OCC prices, has now reduced to more “normal levels”.

“We are pleased to see volume growth in August and the reduced OCC costs”

Miles Smith, DS Smith

The Board at DS Smith also intends to declare an interim dividend for the half year to 31 October 2020.

Relevant

Miles Roberts, group chief executive, said: “The underlying drivers of demand for corrugated packaging remain strong and our sustainable packaging solutions for resilient FMCG and e-commerce customers are more relevant than ever.

“While the macro-economic outlook remains challenging, we are pleased to see volume growth in August and the reduced OCC costs. Our
customer focus, strong cost control, cash generation, and liquidity profile, together with continued performance in line with our expectations, gives us confidence for the future.”