DS Smith – pre-close trading update

DS Smith has released a pre-close trading update in respect of the year ending 30 April 2022.

The report, which can be found here, gives a trading update, discusses cash flow as well as the Russian invasion of Ukraine. The company says its only involvement in these countries is a minority investment in a Ukrainian business, which serves customers predominantly in Ukraine with limited sales in Russia. They have no other operations or employees in Russia. Due to the invasion and ongoing impact on the business in Ukraine, they are impairing their investment with an anticipated one-off non-cash charge of approximately £30m in FY22. The contribution to FY21 results was £4m after tax.

Miles Roberts, Group Chief Executive, said, “I am pleased with the continued momentum and performance of the business in another year disrupted by COVID-19 and macro-economic uncertainty amplified by the Russian invasion of Ukraine.

“We have seen continued good momentum across our customer base, with volumes from our FMCG customers growing particularly well, underpinned by consistently high levels of service and product quality. Within Europe our Eastern and Southern regions have performed ahead of the Group average, and in the US we are seeing the benefit of the Indiana site contributing to further very strong volume growth in the region.

“Strong management of our supply chain and cost base, together with volume growth and increasing packaging prices to recover the increasingly higher input costs, is delivering the expected strong profit growth. It is particularly pleasing to see the performance from areas where we have significantly invested recently, with the North America and Southern Europe regions expected to be the highest margins within the Group, with Europac delivering a very strong operational and financial contribution.

“We have continued to make good progress in our sustainability goals and in January 2022 we committed to align our global operations to the sector leading 1.5°C scenario as set out in the Paris Climate Agreement and aligned with the Science Based Targets initiative as well as to net zero CO2 emissions by 2050.”

He concludes, “We have continued to invest in our business, leveraging our scale, our deep customer relationships and sustainable innovative solutions to lead the transition to a more circular economy, providing a strong platform for growth. We are mindful of the volatile macro-economic environment but have to date seen little or no evidence of changes to customer behaviour and we enter the next financial year with confidence.”

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