2 July 2020 by Steve Eminton

‘Limited’ coronavirus impact at DS Smith

Paper mill and recycling business DS Smith today posted full year financial results to 30 April 2020 with revenue down 2% year-on-year but profits up 5%.

The company said the results showed a “strong financial performance and position” with a “growing market share”.

DS Smith also said, in a statement accompanying the results, that the impact of the COVID-19 pandemic was relatively limited – although the results only include about one full UK month of the pandemic period. However, it put £15 million as a direct impact of the pandemic for the financial year to April 2020. Profits were £660 million on revenue of just over £6 billion.

Checking feedstock at Kemsley mill

And, DS Smith referenced the recent spike in the value of used cardboard (OCC/Old KLS) claiming that this expected to have the “largest ongoing impact” – despite the fact that prices fell back soon after the spike.

A slump in demand for finished product for use in the industrial sector was highlighted by group chief executive, Miles Roberts who said: “Volumes of finished product to industrial customers will be hit by the impact of COVID-19 and increase the company’s costs.”

And alongside comments on the results some of the challenges that mill groups face in using waste (recovered) paper for recycling, were signalled by Colin McIntyre, chief executive for paper and recycling at DS Smith.

Laminated fibres

Mr McIntyre commented on the switch by some brands from plastics to paper packaging. He said: “As brands look to move away from single-use plastic packaging, being able to manage coated and laminated fibres through the recycling process has, and will be, a huge focus area for us going forward.”

Colin McIntyre: ‘Laminated paper will be a huge focus area’

Addressing the performance of the company’s Recycling Division, Mr McIntyre said: “We can be really pleased with how our Recycling Division has performed against a backdrop of challenging market conditions. There has been volatility in all markets with general downward pressure on prices throughout the year, but latterly that was countered by price spikes specifically related to the Covid-19 pandemic.”

Quality

Mr McIntyre continued: “We continued to see quality of materials for recycling at the very forefront of the industry, especially as the effects of tighter quality controls in China and other overseas markets continued to bite. Staying close to our customers and understanding their requirements has been key for us. Through our Near Infrared and Moisture Gate technologies we worked with our customers and suppliers to improve the overall quality of paper for recycling, and that has been a real differentiator for us.

“We have also been doing some exciting work around artificial intelligence, looking to how we can better use cameras and intelligent learning to improve both collection and processing.”

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