At the same time, the company confirmed that cash flow control was one factor helping its performance.
Group finance director, Adrian Marsh, said: “We have stepped up our focus on tight capital and cash management” adding that this was a factor in the company’s reduction of its net debt, and warning that this “focus won’t lessen”.
The results, for the first half of the company’s financial year, showed revenue at £1.971 million for the six months period and adjusted operating profit before tax of £176 million.
DS Smith, which is rapidly expanding across Europe including into new markets of Greece and Turkey, also noted that its income from selling waste or recovered paper and board had reduced with more of a focus on internal use. In a statement accompanying the results, the company explained that underlying revenues had increased, “with the positive impact of increased volumes in corrugated packaging and plastics partially offset by reduced external revenue from paper and recycling, principally due to improved levels of integration.”
UK centralisation
An ongoing shake-up of the structure of DS Smith in the UK is reported in the accounts. The company points to an exceptional post-tax item of £5 million principally relating to “continuing UK centralisation projects”.
Miles Roberts, DS Smith group chief executive, highlighted how the company has a number of multinational clients including Nestle, Unilever, Reckitt Benckiser and Procter & Gamble. He said he was “delighted… how we help them sell more product at point of sale in a retail environment which is changing considerably.”
And, Mr Roberts said that the Kemsley paper mill in Kent had benefited by the company’s purchase of SCA. “The UK has benefited from a turnaround at Kemsley mill. From our acquisition of SCA we have gained strong individuals who have turned it from loss making to profitability.”
Turkey
DS Smith today reported that on 3 December 2014 Kaplamin Ambalaj, in which the group has a minority interest, was required to announce by the Turkish Stock Exchange that DS Smith and Cukurova have entered into an exclusive letter of intent in relation to the potential acquisition by DS Smith of Cukurova’s majority shareholdings in Kaplamin Ambalaj and a wider group of packaging assets in Turkey and Greece in which DS Smith currently has non-controlling interests.
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These businesses, said DS Smith today, currently have a consolidated annual turnover of approximately €160 million with five plants across western Turkey and three plants in Greece. “Discussions are at a preliminary stage and any acquisition remains subject, inter alia, to a number of conditions and satisfactory completion of due diligence. There is therefore no certainty at this stage as to whether agreement will be reached, or as to the timing of any transaction.”
Mr Roberts said he was “very excited” about the Turkish market opportunity because there was a population there of 80 million people and no pan-European material supplier in the marketplace.
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