British cardboard maker DS Smith has forecast overall annual performance to be ahead of its expectations, helped by strong revenue growth and cost-cuts.
The London-based company, which provides packaging, paper and recycling services, has seen its volumes fall after a fruitful 2022 fiscal year where it tapped growing demand for recyclable boxes and benefited from a boom in online shopping.
In a statement published on its website, the company said year-to-date trading continued well, driven by pricing momentum and good cost control, although like-for-like corrugated box volumes fell slightly.
'Pleased With Momentum'
"I am very pleased with the performance in the year to date and the momentum in our business," commented chief executive Miles Roberts.
"We remain focussed on delivering for our customers and managing our costs in an inflationary environment. While the macro-economic outlook remains uncertain, performance this year is ahead of our previous expectations and we look forward to the remainder of the year with confidence."
DS Smith also said it expects adjusted operating profit of at least £400 million (€455.7 million) for the half year to October 31. It had earned £276 million (€314.4 million) a year earlier.
'Overall performance for the current full financial year is expected to be ahead of our previous expectations,' the company said in a statement.
Last month, the group unveiled a new packaging facility in Castelfranco Emilia, near the city of Modena in Italy, which will boost its drive to develop more sustainable packaging, the firm said.
Commenting on the group's performance, Russ Mould, investment director at AJ Bell, said, “Over the past decade online shopping made the tired old packaging sector relevant and interesting again – including names like DS Smith. The need for boxes to transport goods to people’s doorsteps supported these businesses’ growth, with their strong commitment to recycling also helping to earn them helpful ESG credentials.
“No surprise then that DS Smith shares have been weak this year as green investing has gone out of fashion and concerns about a slowdown in e-commerce, linked to the cost-of-living crisis, have had a knock-on effect.
“It’s in the context of concerns about demand which DS Smith’s lifting of annual guidance has been received so positively. Despite falling volumes DS Smith has demonstrated genuine pricing power. Innovation in the sector means there’s a bit more to what it produces than the soggy old cardboard boxes sitting in your attic.
“DS Smith’s ability to keep a tight rein on costs, despite significant inflationary pressures is another tick in the box and shows this is a well-managed outfit.”
News by Reuters, additional reporting by ESM – your source for the latest packaging news. Click subscribe to sign up to ESM: European Supermarket Magazine.