DS Smith reports profit increase as it completes SCA Packaging deal


Packaging manufacturer and recycler DS Smith has reported a 44 per cent increase in profit before tax to £110.2 million just days before it is due to complete its purchase of SCA Packaging.

Pre-tax profits were up from £76.7 million in 2010/11 with like-for-like revenue up 8 per cent on last year.


DS Smith Group chief executive Miles Roberts said: “2011/12 has been a pivotal year for DS Smith. Building on the success of the previous year we further improved the operational and financial performance of the business, with substantial improvements in revenue, growth, profitability and returns on capital. Alongside our organic growth and business improvement, we also significantly re-shaped the Group in line with our strategic aim to become the leader in recycled packaging for consumer goods.

“For the year 2012/13 we have much more to accomplish with the planned completion and integration of the SCA Packaging acquisition, which will transform our pan-European market position.”

DS Smith noted that its UK packaging business, which comprises its recycling operations, paper manufacturing and the design and manufacture of corrugated packaging, has delivered a revenue increase of 5 per cent, principally driven by pricing to recover input costs.

It added in its results document: “The year has been characterised by a robust performance from the corrugated packaging and recycling businesses and firm cost control resulting in an improvement in operating profit of 19 per cent and an improvement in margin of 80 basis points, despite significant headwinds from the paper manufacturing business, where market conditions have been volatile, particularly in the second half of the year.

“In recycling, which includes all recycling operations including those outside the UK, overall volumes of fibre collected increased by 3 per cent to 1.8 million tonnes…Revenue in the recycling business increased significantly and margins remain good while return on average capital is excellent, reflecting the quality of service we provide.”

It also stated: “Underpinning the delivery of all our financial targets has been the Group’s decision to be a net purchaser of paper, rather than a fully integrated producer. By being long in packaging and short in paper, we have had the ability to adjust corrugated prices quickly where we have needed to and to take decisions which may have short-term impacts on volume, where they have benefitted the financial performance overall.”