13th Jun 2019 08:29
(Alliance News) - Packaging firm DS Smith PLC on Thursday reported a "strong" set of annual results, with the US business coming in "well ahead" of expectations.
For the 12 months to March, DS Smith's pretax profit rose 35% year-on-year to GBP350 million, with the adjusted figure up 31% to GBP569 million.
Revenue for the period climbed 12% to GBP6.17 billion, with organic corrugated box volume growth 2.4% after a strong first half, though growth did ease slightly in the second half. This box volume growth was ahead of market growth, DS Smith added.
DS Smith is paying a final dividend of 11.0 pence per share, taking the year's total to 16.2p, 13% higher than the 14.4p paid a year before.
The FTSE 100 firm reported a "record" return on sales margin of 10.2%, ahead of its 8% to 10% target. As a result, it has now upped its target to 10% to 12%.
Performance in North America was "very good", DS Smith said, with revenue rising 59% at constant currency to GBP639 million and adjusted operating profit by 63% to GBP106 million.
"Our North America business has performed well ahead of our initial expectations. Integration work has continued through the year such that the majority of the upgraded cost synergy target of USD40 million has been achieved, well ahead of schedule," said DS Smith.
"Meanwhile, the customer reaction to our packaging continues to be very good, with a number of customer wins from large multinational groups that we had previously served only in Europe."
DS Smith said it was a "year of good delivery" overall, with "substantial" progress being made in Europe. Europac, the purchase of which was completed in January, is an "exceptional" opportunity, with integration going well so far.
As a result, DS Smith has increased its savings target for the Europac deal to EUR70 million a year by the end of financial 2022 from EUR50 million before.
Looking forward, DS Smith did note some volume weakness in export-led markets, especially Germany, but the company sees this improving during its newly begun financial year.
"This strong set of results from DS Smith demonstrates the company's growing scale and strategic progress in key markets," said Chief Executive Miles Roberts.
"The underlying drivers of demand for sustainable corrugated packaging and our differentiated offering give us confidence in ongoing volume and market share growth," Roberts continued.
"While volatility in the macro-economic environment and input costs remains, our focus on pricing discipline, operating efficiencies and cash flows supports our expectations of further good progress in the coming year."
Shares were 0.8% higher in early trade on Thursday at a price of 345.80p each. The stock is down 35% over the past 12 months.
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