Higher finish product prices help DS Smith

In a trading update today (10 March), for the period since 1 November 2021, the company pointed to ‘continued momentum’ in its business, with “good progress in profitability and cash generation”.

DS Smith pointed to above average growth among its larger customers – these are thought to include retail giants such as Amazon.

In terms of input costs, the company listed several. These include high prices for OCC – old KLS or used cardboard and mixed papers – which they said reflects strong demand for the material.

Also hitting input costs are energy bills and rising wages. To help cope with the increase in energy costs, DS Smith said: “High levels of hedging for energy maintained during FY22 and into the next financial year.”

The outlook for the year remains unchanged by recent events

• Miles Roberts, DS Smith group chief executive

Ukraine

In his comments Miles Roberts, group chief executive, first referenced the situation in Ukraine. He said: “We have been shocked and appalled by the Russian invasion of Ukraine and I am very proud of the level of support, focus and performance of everyone who works at DS Smith.”

He continued: “Despite the increasing macro-economic and geo-political uncertainty, the outlook for the year remains unchanged by recent events with the second half of the year continuing to show good momentum. Our geographic footprint, secure supply chain and customer offering focussed on innovative sustainable packaging solutions remains compelling to our resilient customer base of FMCG multi-national companies and has driven continued good volume growth, despite the strong comparatives.

“We have successfully managed the inflationary cost pressures experienced in the market, and this, together with raising packaging prices and growing volumes, is driving the anticipated increased profitability and cash generation.”

Looking ahead, Mr Roberts noted: “The structural growth trends for corrugated packaging are stronger than ever, and we have strategically positioned the business well to capture these drivers, underpinning our confidence in progress for the remainder of the period and into our next financial year.”