DS Smith has raised its interim dividend by 25% and has forecast a stronger-than-expected annual performance, after the British cardboard maker posted an increase in its first-half profit due to higher box prices and tight cost controls.
The packaging giant, which supplies packaging to clients including the likes of Amazon and Unilever, reported a 51% jump in adjusted operating profit from continuing operations at £418 million (€484.6 million) for the six months ended October 31.
'Significant Economic Volatility'
“The performance during this six month period has been strong, benefiting from our constant focus on our customers' evolving needs during this time of significant economic volatility," commented Miles Roberts, group chief executive. "This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios.
Roberts added that the group was "particularly pleased" with the performance of its Southern Europe business, which "continues to deliver major benefits from the acquisition of Europac in 2019".
Decline In Box Volumes
The profit surge comes despite box volumes declining 3% in the first-half, hit by a weaker-than-expected industrial sector and economic challenges — particularly in the UK and Germany, the company said.
The company, which provides packaging, paper and recycling services, had expected half-year adjusted operating profit of at least £400 million (€463.7 million). It had earned £276 million (€309.5 million) a year earlier.
"The macro-economic outlook for the rest of the financial year remains challenging," Roberts added. "However, we have an excellent customer base, efficient high quality assets, dedicated colleagues and a strong balance sheet allowing continued organic investment to support our customers."