5th Sep 2007 07:02
Smith (DS) PLC05 September 2007 5 September 2007 DS SMITH PLC INTERIM MANAGEMENT AND AGM STATEMENT In accordance with the UK Listing Authority's Disclosure and Transparency Rules,DS Smith Plc, the international packaging manufacturer and office productswholesaler, is today publishing its first Interim Management Statement, inrespect of the period from 1 May 2007 to 31 July 2007. DS Smith will be holdingits Annual General meeting today at 12 noon. DS Smith Group DS Smith has continued to benefit from the better pricing environment in thepaper and corrugated packaging market and the actions taken to strengthen theGroup. Although input costs for the Packaging businesses have risen further,the positive trend in the Group's performance in the second half of the 2006/07financial year has continued in the first quarter of 2007/08. The Group'sbalance sheet remains strong and there has been no significant change to thefinancial position of the Group since the publication of the Report and Accountsin respect of the year ended 30 April 2007. Paper and Corrugated Packaging Demand for corrugated packaging in the European market in 2007 has remainedgenerally good but growth has been lower than in 2006. The German and EasternEuropean markets have continued to grow strongly while the UK and French marketshave been broadly flat. The industry supply position for recycled corrugatedcase material (CCM) remains balanced and this has underpinned the firmer pricingenvironment in both CCM and corrugated boxes. No significant CCM capacityadditions are expected in western Europe in 2007 and 2008. A number of EuropeanCCM producers have recently announced their intentions to invest in new capacitywhich is expected to come on stream from 2009 onwards; the capacity announced todate would broadly be absorbed by current levels of market growth. Input costsof energy and waste paper, the principal raw material for recycled CCM, haveremained high and, as a result of continued strong demand for waste paper fromAsia, there have been further increases in its price. Our Paper and Corrugated Packaging businesses have maintained their focus ongrowing sales in the higher value-added sectors of the market, such asretail-ready packaging, while seeking to recover the previous substantialincreases in their input costs. They have raised box prices further through thespring and summer of 2007. With effect from the beginning of September 2007,our UK Paper business is implementing another increase in CCM prices in order torecover the recent rise in waste paper costs. Both in the UK and on thecontinent, our Corrugated Packaging businesses will be going out for further boxprice increases during the coming months to recover the higher costs in thesupply chain. In UK Paper and Corrugated Packaging, we have continued to benefit from theimproved pricing in both paper and corrugated packaging; we are also benefitingfrom the extensive actions we have taken to raise efficiency. Our ContinentalEuropean Corrugated Packaging segment is a net buyer of CCM; it has recovered aconsiderable proportion, but not all, of the previous cost increases and thisshortfall has put a squeeze on its margins. The latest rise in CCM prices willresult in further pressure on margins in our continental businesses until we areable fully to recover the higher input costs. Plastic Packaging As we indicated in June, the Plastic Packaging segment has faced furtherincreases in the costs of polymer, both virgin and recycled. Our efforts torecover these higher input costs through targeted price increases have met withlimited success to date. In liquid packaging and dispensing, results have beenaffected by a combination of lower sales and competitive price pressure; theconsultation with employees about the proposed restructuring of our Europeanoperations in this sector is continuing. At this early stage we are aiming forsome progress in this segment over the year. Office Products Wholesaling The Spicers UK business has performed in line with our plan to rebuild profits.The actions taken by the new management team have continued to enhance the salesmix, raise service levels and reduce costs. The closure of the Park Royalregional distribution centre (RDC) in London was concluded successfully in Junewith its business being transferred to other Spicers RDCs. The continentalEuropean businesses have continued to perform well and have made good progress. Group Outlook for financial year 2007/08 As stated at the time of our Preliminary Results in June, our priorities forthis financial year are to continue to drive for recovery of the high inputcosts within our Packaging businesses and to raise profits at Spicers,particularly in the UK. The Board remains confident that the Group will makegood progress this year. The Group's interim results for the half year to 31 October 2007 will bereleased on 5 December 2007. Enquiries DS Smith Plc 020 7932 5000Tony Thorne, Group Chief ExecutiveGavin Morris, Group Finance DirectorPeter Aubusson, Group Communications Manager Financial Dynamics 020 7269 7121Richard Mountain/Susanne Yule A conference call for analysts and investors, hosted by Tony Thorne and GavinMorris, will take place today, 5 September, at 8.15 am BST. The dial-in numbersare: UK participants: 020 8817 9301International participants: +44 20 8817 9301Alternative back-up number: +353 1 436 4265 A recording of this conference call will be available by telephone from one hourafter the call has ended until 17.00 BST on 12/9/07. The dial-in numbers forthis recording are: UK callers: 020 7769 6425International callers: +353 1 436 4267Replay security code: 1004563# A recording of the call will also be available through the Investor Relationssection of our website: www.dssmith.uk.com from 14.00 BST today. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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