Major UK paper recycler reports “strong” financial results

Packaging and office products firm DS Smith Plc, which owns Severnside Recycling and the St Regis Paper Company, made its comments in its statement for the first quarter of the current financial year (September 5, 2007).

It revealed the group's “balance sheet remains strong” and there had been “no significant change to the financial position” since it published its annual accounts for the year ending April 30, 2007.

However, the London-based group – which specialises in collecting corrugated card through Cardiff-based Severnside Recycling and recycling it into corrugated case material (CCM) through Berkshire-based St Regis – explained that the increasing costs of waste paper driven by demand from China, had forced it to raise its prices for new corrugated packaging.

Writing on its website, it said: “Input costs of energy and waste paper, the principal raw material for recycled CCM, have remained high, and, as a result of continued strong demand for waste paper from Asia, there have been further increases in its price.

It added: “With effect from the beginning of September 2007, our UK paper business is implementing another increase in CCM prices in order to recover the recent rise in waste paper costs. Both in the UK and on the continent, our corrugated packaging businesses will be going out for further box price increases during the coming months to recover the higher costs in the supply chain.”

Plastic

However, despite managing to implement price increases for corrugated packaging, DS Smith's said that it had not managed to recoup the rising cost of both virgin and recycled polymers in its liquid plastic packaging division.

It stated: “Our efforts to recover these higher input costs through targeted price increases have met with limited success to date.”

The company added that growth in European demand for its corrugated boxes was lower that in 2006 – with “broadly flat” markets in the UK and France compared to Germany and Eastern Europe.

DS Smith's divisions include UK Paper and Corrugated Packaging (£687m revenue), European Paper and Corrugated Packaging (£308m), Plastic Packaging (£202) and Office Products Wholesale – working under the name of Spicers UK (569 m).

Summing up its outlook for the current financial year, it said: “Our priorities for this financial year are to continue to drive for recovery of the high input costs within our packaging business and to raise profits at Spicers, particularly in the UK. The board remains confident that the Group will make good progress this year.”