20th Jun 2024 11:25
(Alliance News) - DS Smith PLC said a sale of the FTSE 100 company to International Paper Co remains the plan, despite the suitor receiving bid interest of its own, as M&A speculation overshadowed the packaging firm's annual results on Thursday.
London-based DS Smith said revenue in the financial year that ended April 30 declined 17% to GBP6.82 billion from GBP8.22 billion, sending pretax profit down 24% to GBP503 million from GBP661 million.
The company noted that net finance costs increased 39% to GBP103 million from GBP74 million year-on-year amid a higher interest rate environment.
"We are pleased to have delivered a robust performance, despite the challenging environment, driven by our focus on customers, quality, service and innovation together with the benefit from our self-help productivity initiatives," Chief Executive Officer Miles Roberts said.
DS Smith maintained its final dividend at 12 pence per share, giving a full-year payout of 18p, also unmoved on-year.
Looking ahead DS Smith said: "The positive trends in packaging volumes from the second half of last year have continued into the current financial year and we remain focused on pricing, operational efficiency and tight cost control. The increasing demand is resulting in higher paper and other input costs, including old corrugated cases. We anticipate this will be reflected in packaging price rises, with the benefits expected to be weighted to the second half of our current financial year and provide further momentum into FY26."
DS Smith in April accepted an all-share takeover from Memphis, Tennessee-based International Paper, valuing DS Smith at GBP5.8 billion on a fully diluted basis.
CEO Roberts told reporters that both sides are still "working very diligently on bringing the businesses together", PA reported.
That was a nod to Brazil's Suzano SA last month confirming its interest in acquiring International Paper.
"However, it reiterates that, up to the moment, there is no agreement, binding or otherwise, nor any decision or deliberation by the company's management regarding a potential operation that meets the minimum materiality required to qualify as a material fact," Suzano said in a US filing in May.
Such a deal would throw into doubt International Paper's acquisition of DS Smith.
Hargreaves Lansdown analyst Matt Britzman said on DS Smith: "Current trading is, to some extent, a moot point. Takeover talk is driving the stock and will continue to do so unless there's a material change to the current deal with International Paper Company. But with the suitor subject to its own takeover speculation, there is reason to be cautious. There could still be twists in this story."
DS Smith shares were up 1.2% to 356.20 pence on Thursday morning in London. The stock is up 15% over the past year.
By Eric Cunha, Alliance News news editor
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