However DS Smith's operating profit is only down very slightly compared to the same period in 2005/06 thanks to increased cardboard box prices and the sale of its Taplow Mill restructuring including mill closures.
In its interim results for the first half of 2006/07 DS Smith announced that its revenue for the first half of the year was 342.6 million – up from 331.1 million the previous year.
Its operating profit fell by just under 1 million from 14.4 million last year to 13.5 million.
And in its interim results the company stated: “The UK Paper and Corrugated Packaging segment, which is a net seller of paper, continued to be affected by rising input costs. Increase for the segment was circa 12 million in the costs of energy and waste paper.”
Waste paper
Including European ventures, DS Smith's operating profit was affected by a 17 million increase in costs.
The company has partly blamed this on the increase in waste paper prices, which it believes will remain high due to increased demand from the Far East and a falling PRN price
However the company off-set this cost by increasing selling prices, their CCM prices were 35% higher in the first of the year than at the end of 2005/06. Corrugated prices were also increased by 10%.
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The higher prices are complimented by the sale of the company's paper mill at Taplow, which made losses in 2005/06. The site is being sold to a commercial property developer for 30.3 million.
DS Smith is also growing its market share in higher added-value corrugated products and maintaining good sales of speciality paper products. The company also said that it was planning to develop sales of its plasterboard liner.
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