In half year results today (7 December), paper and plastics packaging giant DS Smith reported “strong organic volume growth of 5.2%” and highlighted its success in the e-commerce sector.
In the UK revenues jumped by 18% to £550m for the half year to 31 October 2017 (H1 2016/17 £466m). And, the company said that it had achieved a leading position in e-commerce in the UK which it is trying to replicate in other European countries.
One factor in the success is thought to have been the appointment 12 months ago of Isabel Rocher, former head of EU packaging and shipping supplies at Amazon, to lead its new specialist e-commerce team.
DS Smith, which has its main UK cardboard making mill at Kemsley, in Kent, also said today that it was managing to push up the price of finished product (primarily cardboard for boxes) to recover the higher price of its waste paper feedstock.
And, it highlighted its ongoing global expansion with acquisitions in hand in Romania and the new Interstate Business in the US going well.
One topic that was not featured in its half-yearly announcement was the DS Smith statement last month that after supplying Essity (formerly SCA Hygiene) with waste paper for its tissue mills, Essity had decided to take the supply back in house. This is for Essity’s Prudhoe, Ramsbottom and Chesterfield sites and applied from 1 December 2017.
In a statement last month, Essity and DS Smith said they were committed to working together to ensure a smooth transition for all parties. DS Smith said that “Essity and DS Smith have enjoyed a productive relationship over the last fiveyears and we look forward to our organisations continuing to work together in the future.”
Alongside today’s results, DS Smith said that organic corrugated box volumes have grown at 5.2%, “well ahead of our target of GDP+1% which represents a continuation of the momentum of the previous year. Growth is due to market share gains, with strong volumes again from our pan-European customers, particularly within the e-commerce category, together with an improvement in European economic growth. Return on sales for the period was 9.0%, the midpoint of our target range of 8 – 10%. We are pleased with our progress in recovering paper price rises and have also benefited strongly from operational leverage.”
The company noted on Interstate: “We are delighted by the financial performance and operational progress to date, with employees showing great enthusiasm to be part of leveraging our packaging expertise in this exciting market. We are actively engaged in discussions with both international customers of Interstate and DS Smith and have been enjoying positive responses, particularly from large customers of the Interstate Resources group, who recognise the benefit of sourcing from a large company with innovation and expertise in shelf-ready packaging, for example.”
Miles Roberts, Group Chief Executive this morning spoke of some of the trends the business was seeing in the marketplace. He pointed to changing demographics and consumer choice issues with more retail channels, the rise of e-commerce and reductions in pack sizes.
Plus, he noted there were new emerging brands in the consumer marketplace.