DS Smith profits narrow from 1 year ago

London-based packaging and paperboard producer DS Smith has reported net income of more than $459 million in the first half of its 2023-2024 fiscal year, which ended Oct. 31.

Although profitable, the company’s net income fell by about 12.7 percent compared with the $526 million it earned in the first half of its 2022-2023 fiscal year, covering mid-2022.

Calling its results a “robust performance in [a] challenging environment,” the company says remained profitable despite a decline in like-for-like box volumes of 4.7 percent in its current fiscal year first half compared with the prior one.

“Pricing has been resilient, underpinned by strong customer relationships, innovation and high service levels, with downward pressure offset by lower input costs and productivity initiatives," DS Smith says.

“I am pleased with the performance for the first half of the year,” adds Miles Roberts, group chief executive of DS Smith. “Our focus on value-added packaging solutions to predominantly fast-moving consumer goods (FMCG) customers, together with the benefit from our self-help productivity initiatives and flexible supply chain, has driven a robust profit performance.

“Our Q2 volume performance was improved versus Q1, and we expect this trend to continue with H2 volumes stronger than H1, sequentially and on a like-for-like basis, as we continue to win market share.”

Looking at the rest of this calendar year and into 2024, DS Smith anticipates markets to remain challenging but says it remains focused on its customers and costs, expecting to deliver full-year results in line with management expectations.

"Looking forward, we remain confident in our business model and our capital and operational investment programs, which drive innovation, growth, improving productivity and environmental efficiency," the company says.

DS Smith's largest volume decline was in Northern Europe, including the U.K. and Germany, where it has greater weighting to industrial and e-commerce customers. However, the company notes Eastern Europe was "relatively resilient," and its North America division saw volume growth for May 1 to Oct. 31 period.

As an average in its operating regions, packaging prices were down approximately 9 percent in its fiscal year first half, but DS Smith says more recently that packaging prices have been more resilient than expected.

The decline in sales prices fetched in its fiscal year first half “was almost completely offset by a reduction in raw material costs and cost mitigation actions, which led to an overall decrease in costs,” says DS Smith, pegging its reduction in raw materials costs (including recovered paper grades such as old corrugated containers) of $452.5 million in the six-month time frame.