DS Smith Plc (“DS Smith” or “the Group”), the international packaging supplier and office products wholesaler, today publishes its Interim Management Statement in respect of the period since 1 May 2010. DS Smith will be holding its Annual General Meeting today at 12 noon.
DS Smith Group
Overall trading in the first quarter of financial year 2010/11 has been encouraging, with good volume growth throughout the group. This is led from progress in the FMCG (Fast Moving Consumer Goods) sector driven by our focus on service, innovation and efficiency.
Packaging
Our Paper and Corrugated Packaging businesses have had a good first quarter with positive demand trends, in Europe and the UK, feeding through to increased volumes. The anticipated phased recovery of paper price increases has led to profits in line with our expectations. Plastics have also had an encouraging start to the year with good volume growth and cost control.
Office Products Wholesaling
The trading performance at Spicers is ahead of last year with profitability increasing due to better product mix. The focus remains on improving mix and on tight cost control to ensure Spicers leverages its strong market positions to take advantage of improving economic conditions.
Business Review
The review of our business strategy is making considerable progress. As set out in June this year, our aims are to create a growing business that is more focused, producing higher margins and returns with less cyclicality. We expect to announce our conclusions at the time of our half-year results on 9 December this year.
Acquisition of Otor
On 7 July 2010 the acquisition of Otor for €247m was announced and completion took place, earlier than planned, on 1 September 2010.
As set out at the time of announcement of the acquisition, we expect Otor to be accretive, before exceptional costs, to both earnings and margins in the first full financial year of ownership, with a return on investment above DS Smith’s weighted average cost of capital.
The integration teams are established and the work is proceeding well to realise annual cost synergies of €9.3 million in the second full financial year of ownership. Combining Otor’s successful, well-established, FMCG focused corrugated packaging business with our existing French operations will create a platform for further revenue opportunities across the wider European market.
Save for the acquisition of Otor as described above, there has been no significant change to the financial position of the Group since the publication of the results for the full year to 30 April 2010.
Pension
We have started consultation with the remaining active employee members of the Group’s UK defined benefit pension scheme with a view to closing the scheme to future accrual. This will help the Group better manage this exposure in the future.
Outlook
The year is progressing in line with expectations underpinned by continued FMCG demand and we continue to grow our business through our continuous focus on innovation and servicing the customer. We look forward to the remainder of the year with confidence.
Enquiries
DS Smith Plc
+44 (0)1628 583 400
Miles Roberts, Group Chief Executive
Steve Dryden, Group Finance Director
Rachel Stevens, Head of Investor Relations
Tulchan
+44 (0)20 7353 4200
John Sunnucks
David Allchurch
Matthieu Roussellier
