DS Smith Plc, the international packaging manufacturer and office products wholesaler, today publishes its Interim Management Statement, in respect of the period since 1 November 2009.
DS Smith Group
As discussed in our previous statements, the Group's results have been underpinned by the actions taken to cut costs, raise productivity and generate cash. In the third quarter of financial year 2009/10, trading has been ahead of management's expectations at the time of the Group's interim results announcement in December 2009. Primarily this reflects better
sales than previously anticipated, across both Packaging and Office Products Wholesaling. There has been no significant change to the financial position of the Group since the publication of the results for the six months to 31 October 2009. Cash flow generation remains strong.
Packaging
As reported in our December 2009 statement, demand for corrugated packaging in the European market continues to recover, although it is still below the level at this time in 2007. Our corrugated case material (CCM) price increases of September and October 2009 were implemented as expected and we are continuing the programme of increasing box prices. Combined, these actions are progressively allowing us to recover the significantly higher input costs incurred in the second half of the last calendar year. The cost of our key raw material, waste paper has continued to move up and we have advised our customers of a further increase in CCM prices.
Plastic Packaging has continued to display the recovery in profits noted in the first half; benefiting from restructuring, cost cutting and sales into new markets.
Office Products Wholesaling
As previously advised demand for office products across our markets is substantially affected by the slowdown in the European economy. Against this background, Spicer's sales performance continues to be good. The actions taken in the UK business are improving its performance and this is starting to come through in the results. Outside of the UK the
combined profits are in line with last year.
Outlook
We continue to be faced by both the uncertainty surrounding the strength of the economic recovery and the need to recover rising input costs. Nevertheless, business performance remains encouraging and management is confident of meeting its expectations for the year to April 2010.