8th Apr 2020 09:48
(Alliance News) - DS Smith PLC on Wednesday said its trading has been resilient and suffered "relatively little impact from Covid-19" so far with its annual result likely to be as expected.
The packaging firm has been classified as a critical business in "virtually all markets" where it operates given its involvement in supplying packaging for food and other essential products.
"All our factories are, and have been operational throughout, albeit with further enhanced safety and hygiene standards," said DS Smith.
Demand for corrugated boxes has been good and was higher in the first half of its financial year on a like-for-like basis. DS Smith said its focus on fast-moving consumer goods being of particular benefit.
"On a regional basis, the main impact to date has been in southern Europe which includes the markets of Italy, France and Spain. The northern region including Germany, Benelux, UK and Scandinavia has seen less effect whilst eastern Europe has not seen any meaningful effect to date. Within our North American operations, trading has remained relatively robust, consistent with the overall group," said DS Smith.
DS Smith noted that supplies into the grocery sector were "very busy", especially in hygiene, ambient food, drinks, dry packaged groceries, and frozen food. In addition, e-commerce demand has also been strong in the majority of categories, especially in everyday essential product. The firm pointed out its "clear market leading positions" in these sectors.
While the industrial sector has suffered, DS Smith said it has been protected by its "more limited exposure" in this area.
Given this, DS Smith said it expects to post an annual result for its year ending April 30 that is in line with its current expectations.
At present, DS Smith has undrawn facilities totalling around GBP1.4 billion with no significant refinancing needed until 2023. It expects its net debt to earnings before interest, tax, depreciation and amortisation ratio to be around its 2.0-times medium-term target.
However, given the "exceptionally uncertain global environment", DS Smith said it has opted not to pay the interim dividend which had been due for payment at the start of May.
DS Smith's executive directors are waiving their rights to any annual bonus for 2020.
Chief Executive Miles Roberts said: "Trading within the business has been resilient, reflecting our focus on [fast-moving consumer goods] and e-commerce customers and I am indebted to the ongoing tremendous support received from all our employees especially during this challenging time. We continue to work with our customers and suppliers to ensure delivery of essential supplies and are encouraged by the performance of the business, despite the very challenging environment, but are taking a prudent approach to cost and capital allocation until there is greater certainty in the macro-economic outlook."
Shares in DS Smith were down 2.0% at 286.20 pence in London on Wednesday morning.
By Anna Farley; [email protected]
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