DS Smith reports strong start to financial year
DS Smith reports strong start to financial year
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Sustainable paperboard and packaging producer DS Smith says it has seen strong growth in profits and returns in the first quarter of its fiscal year, which began May 1, adding that the results are underpinned by “excellent customer relationships, continued price recovery and good cost and cash management.”
The London-based company, with growing operations in the United States, noted several highlights of the quarter in a report released Tuesday, and says overall trading is in line with its expectations driven by pricing momentum and good cost control.
“We have started the financial year very strongly despite the current macroeconomic conditions,” DS Smith Chief Executive Miles Roberts says. “We are focusing on ensuring the highest levels of security of supply and customer service and are very pleased with the ongoing support we receive from both our customer and supplier base.”
Corrugated box volumes decreased slightly in the first quarter on a like-for-like basis against 13 percent growth in the comparative quarter, which DS Smith says it expected, but the company says it continues to expect growth of at least 2 percent for the full year, which is in line for its full-year expectations of significant improvement in overall performance.
“Whilst the industrial sector is showing some weakness, our FMCG (fast-moving consumer goods) business remains resilient,” Roberts says.
Similarly across the industry, DS Smith says virtually all input costs, including energy, have increased significantly but have been substantially mitigated by the company’s efficiency initiatives and a long-term hedging program. Currently, DS Smith says more than 90 percent of natural gas costs hedged for fiscal year 2023 are recovered through increased packaging pricing, and long-term supplier relationships and other cost management programs are in place to mitigate inflation.
The company says it is continuing strong operating cashflow generation and that its outlook for FY23 remains unchanged “with an expectation of a significant improvement in performance.”
“Overall returns on capital remain within our medium term target,” Roberts says. “As we enter the second quarter, we are very mindful of the challenging economic environment in which we operate and the impact it has on both our customers and our colleagues. However, our operating plans and progress to date continue to give us confidence in our outlook for FY23.”
Roberts also presented to shareholders an in-depth look at the financial and environmental performance of the last fiscal year, which ended in April. The results showed record volume growth of 5.4 percent and a 64 percent increase in profits before tax.
“During a really changing and volatile economic environment, we stayed really close to our customers, responding to their changing needs,” Roberts said during a presentation on last year’s results.
The report discussed DS Smith’s environmental impact, too, which Roberts said it has “a leadership position in,” and said compared with last year, the company has further improved.
RELATED: DS Smith removes more than 313M pieces of ‘problem’ plastics
In fiscal year 2022, DS Smith reduced its CO2 emissions by 5 percent, bringing its total reduction achieved to 29 percent per metric ton of production since 2015.
But Roberts said the company’s big development has been around what he referred to as a science-based target of 1.5 degrees Celsius as noted in the Paris Agreement, which calls for countries to take concerted climate action to reduce greenhouse gas emissions to limit global warming. He said this means a commitment to 46 percent reduction in carbon by 2030 and net zero by 2050.
The presentation also highlighted DS Smith’s growth in circular economy initiatives, including reaching its 100 percent packaging recyclability target based on its Circular Design Metrics system, which compares the circularity of packaging designs across eight indicators: carbon footprint, design for reuse, supply chain optimization, recyclability, planet safety, material utilization, renewable source and recycled content.
The criteria were designed in partnership with the Ellen MacArthur Foundation and, according to DS Smith, 700 of its designers have been trained in the Circular Design Metrics as Roberts said the company continues to roll out the program systematically.
“We’re really excited about not only what it can do for our customers and ourselves, but also what it can do for the environment,” Roberts said.
Roberts said DS Smith has what he called a “strong platform for growth” not only in Europe, but in the United States. While Roberts said the U.S. market is still a new position for the company, he noted it has a lot of customer backing, its profits are rising significantly and it produces the best return on sales in the group.
The company also plans to continue investing for “ongoing customer-led growth,” and when it comes to capacity and capability, for DS Smith that means investing in existing packaging plants, efficiency gains through enhanced technology and ongoing investment in aligning paper to customer needs.
The presentation addressed the outlook for FY23, and Roberts said DS Smith has a positive outlook despite challenging market conditions. The company already has seen a positive start to the year and expects 2 percent to 4 percent volume growth in FY23 while continued price recovery and cost management offset inflationary costs.
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Source: Recycling Today
DS Smith reports strong start to financial year
<![CDATA[Sustainable paperboard and packaging producer DS Smith says it has seen strong growth in profits and returns in the first quarter of its fiscal year, which began May 1, adding that the results are underpinned by “excellent customer relationships, continued price recovery and good cost and cash management.”The London-based company, with growing operations in the United States, noted several highlights of the quarter in a report released Tuesday, and says overall trading is in line with its expectations driven by pricing momentum and good cost control.“We have started the financial year very strongly despite the current macroeconomic conditions,” DS Smith Chief Executive Miles Roberts says. “We are focusing on ensuring the highest levels of security of supply and customer service and are very pleased with the ongoing support we receive from both our customer and supplier base.”Corrugated box volumes decreased slightly in the first quarter on a like-for-like basis against 13 percent growth in the comparative quarter, which DS Smith says it expected, but the company says it continues to expect growth of at least 2 percent for the full year, which is in line for its full-year expectations of significant improvement in overall performance.“Whilst the industrial sector is showing…