DS Smith has issued a trading update in respect of the period since 1 November 2021. The full update can be read here.
The update said trading was in line with management expectations. They have seen continued momentum during H2 with good progress in profitability and cash generation. Volume growth and continuing packaging price increases have more than offset ongoing input cost increases with overall trading in line with our expectations. Good box volume growth has been driven by FMCG customers, with continued like-for-like volume growth despite strong comparatives and some localised Omicron-driven absences within DS Smith and its customers. They expect mid single-digit percentage like-for-like volume growth for the year to 30 April 2022.
Increased input costs fully offset by packaging price progression and volume growth have been supported by strong financial and supply chain management. Input costs including energy and labour continued to increase, with OCC prices remaining high, reflecting ongoing strong demand levels. The energy cost impact has been limited by improved energy efficiency and long-term hedging programme.
In Ukraine and Russia, the company’s only involvement is a minority investment in a Ukrainian business, which serves customers predominantly in Ukraine with limited sales in Russia. Production in these operations is currently suspended.
Miles Roberts, Group Chief Executive, said, “We have been shocked and appalled by the Russian invasion of Ukraine and I am proud of the level of support, focus and performance of everyone who works at DS Smith.”
He concluded, “Despite the increasing macro-economic and geo-political uncertainty, the outlook for the year remains unchanged by recent events with the second half of the year continuing to show good momentum. Our geographic footprint, secure supply chain and customer offering focussed on innovative sustainable packaging solutions remains compelling to our resilient customer base of FMCG multi-national companies and has driven continued good volume growth, despite the strong comparatives. We have successfully managed the inflationary cost pressures experienced in the market, and this, together with raising packaging prices and growing volumes, is driving the anticipated increased profitability and cash generation. The structural growth trends for corrugated packaging are stronger than ever, and we have strategically positioned the business well to capture these drivers, underpinning our confidence in progress for the remainder of the period and into our next financial year.”