The adverse pressures on the business were highlighted by DS Smith chairman Anthony Hichens at the company's annual general meeting last Friday. Mr Hichens said that in the financial year 2003/04, DS Smith “produced a creditable result in tough market conditions.”
Referring back to his comments in April this year, Mr Hichens re-eiterated that price rises for paper during the year are unlikely to restore margins “which are being squeezed further by increases in energy costs.
“These factors,” he said, “are adversely affecting our paper results to a significant extent. On the other hand, our corrugated packaging businesses in the UK and continental Europe have continued to make progress, primarily through operational improvement and their focus on higher value added segments. Papermaking at DS Smith is carried out through the companies St Regis mills which are largely supplied by Severnside.
Corrugated
Bright spots for the company were in corrugated packaging and office products wholesaling.
DS Smith was recently told that its acquisition of LINPAC Containers – in the cardboard sector – is unlikely to be seen as anti-competitive.
Mr Hichens said: “We are encouraged by the provisional finding of the Competition Commission’s inquiry that our completed acquisition of LINPAC Containers is not expected to lead to a substantial lessening of competition. We will continue to work closely with the Competition Commission during the finalisation of its inquiry, which is expected by 3 November 2004. We note the Competition Commission’s comments regarding competitive behaviour in the sheet market and are providing information to the Office of Fair Trading as part of their investigation into this segment of the market.”
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