DS Smith says it is maintaining profitability

United Kingdom-based paper packaging producer DS Smith PLC says it expects up to $768 million in adjusted operating profits for its fiscal year ending at the end of this April.

In a trading update issued to investors, the firm and its Group Chief Executive Miles Roberts cite “continued momentum [with] good progress in profitability and cash generation” during the previous six months.

The company says it has used “continuing packaging price increase” that have “more than offset ongoing input cost increases.” Among its input materials are old corrugated containers (OCC) and other scrap paper grades used to make its containerboard.

As to its finished products, DS Smith reports “like-for-like corrugated box volume growth of at least 5 percent for the year,” referring to the period from May 1, 2021, to April 30 of this year.

Although Russia’s invasion of Ukraine has produced ripple effects in terms of energy costs and other factors, the company says its “only involvement in these countries is a minority investment in a Ukrainian business [that] serves customers predominantly in Ukraine with, limited sales in Russia. We have no other operations or employees in Russia.”

States Roberts, “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 fast-moving consumer goods customers growing particularly well, underpinned by consistently high levels of service and product quality.”

Roberts says DS Smith’s Eastern and Southern European regions “have performed ahead of the group average,” while in the United States the company is “seeing the benefit of the Indiana site contributing to further very strong volume growth in the region.”

Adds Roberts, “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 degrees Celsius scenario as set out in the Paris Climate Agreement.”

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 behavior and we enter the next financial year with confidence.”