26th Jun 2014 07:08
LONDON (Alliance News) - DS Smith PLC said Thursday that pretax profit jumped in its full-year as revenues rose on organic growth and the first 12 month contribution from the legacy SCA Packaging business acquired in 2012.
The recycled packaging for consumer goods supplier said in its results for the financial year 2013/2014 that pretax profit more than doubled to GBP167 million, up from GBP82 million last year.
Revenue rose 10% to GBP4.04 billion up from GBP3.67 billion the previous year. The company also increased its dividend per share by 25% to 10.0 pence per share, up from the 8.0 pence per share paid in 2013.
The company notes that the comparable period only includes 10 months' contribution from SCA Packaging, following its acquisition in July 2012. Revenues in the 2013/2014 financial year grew due to organic growth and the contribution from the legacy SCA Packaging business, said the company.
Operating profit increased 23% per cent to GBP307 million, compared to GBP249 million the previous year, including the benefit of EUR40 million of cost synergies following the acquisition, as expected, said the firm.
DS Smith is encouraged by the results, stating that it has delivered on its targets, with strong growth in profits, returns and dividends during the year, though noting that economic conditions across Europe have remained challenging, with the significant pressure on household budgets impacting the entire supply chain, it said.
"Integration of the business acquired from SCA, in the first full year of ownership, is now well established and we continue to be extremely excited by the opportunities for the combined business. We have delivered on our synergy targets for the year and on our broader key performance indicators, which apply to the whole business. We have gained market share, further improved our health and safety performance and continued to reduce our environmental impact. We are investing further in the business, to underpin future growth," said the company in a statement.
The company said volume growth has been particularly strong in its Central Europe and Italy region, benefiting from new customer wins and expanded service to existing customers, in fast-moving consumer goods, online retail and the automotive sectors. DS Smith's DACH and Northern Europe region has also shown strong growth as the company has been able to offer customers a wider geographic reach, with volume growth across a range of sectors, it said.
The UK market has seen good volume growth, broadly consistent with that of the group as a whole, it said, as the corrugated packaging business has led the move to performance-driven specification.
In 2013/14 the group's corrugated box volumes grew 2.2%, ahead of the corrugated packaging market and ahead of the company's target of volume growth of GDP + 1%.
Paper costs comprise approximately half the total cost of corrugated packaging for the company and paper prices have increased substantially over the period, requiring DS Smith to recover these costs from customers, it said.
Looking ahead, Miles Roberts, Group Chief Executive said, "The current year has started well and is in line with our expectations. While we are planning for a difficult consumer economic environment to remain, our focus on delivery, capital discipline and continued investment in the business provides us with confidence in the sustainability of our business model. Looking ahead we remain excited about further growth opportunities for the Group."
Shares in DS Smith were trading 0.56% higher 307.00 pence per share shortly after the market open Wednesday
By Alice Attwood; [email protected]; @AliceAtAlliance
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