One of the UK’s biggest packaging suppliers has warned that the volatile price of paper is one of the risks the business faces in the second half of the year.
In the risks and uncertainties section of its half yearly results, the company said that the volatility of pricing and availability of globally traded raw materials remained a concern.
However, this was one potential negative in a positive story for the company. Now focusing mainly on recycled packaging, the business reported revenue growth to £1.0345 billion in the half year ended 31 October compared to £822.2 million in the same period in 2010/11.
Profits before tax were up to £42.8 million from £35.6 million compared to the second half of last year.
DS Smith chief executive Miles Roberts said: “I am pleased with the improved performance of every division over the past six months, which has seen the Group deliver a return on sales within the target range.
“We have again delivered a return on capital which is comfortably above our cost of capital and have remained focused on recovering the year-on-year increases in input costs through pricing.
“We have made considerable strategic progress, with the announced disposal of Spicers and the exit of two paper mills on track, leaving the group focused on its recycled packaging businesses. The integration of Otor shows how our customers are keen to develop their businesses with us as we expand DS Smith’s geographic footprint in Europe. We have a strong balance sheet with only a limited Group profit exposure to paper, and will evaluate three opportunities to pursue acquisitions within a fragmented packaging sector that can meet our medium-term objectives.
“We remain confident in the trading outlook for the remainder of this financial year, due to our resilient, growing customer base, despite the uncertain macro-economic environment.
“The actions that we are taking to develop the packaging business and to drive efficiency improvements, will position the Group well in the more challenging trading environment. Our continuing investment in the packaging business underpins our confidence that the Group will continue to develop positively in the medium term.”