DS Smith confirmed its H2 adjusted operating profit stood at £272m
DS Smith (LON:SMDS), the UK cardboard manufacturer, announced on Tuesday that it saw record H2 growth as it benefitted from a boom in online shopping during the pandemic.
The surge offset an initial downturn due to Covid-19 lockdowns, the company added.
Throughout 2020, the coronavirus pandemic hastened the growth of its e-commerce business, in addition to demand for more sustainable products.
DS Smith, supplier of cardboard to some of the world’s most prominent brands, including Amazon and Unilever, confirmed its H2 adjusted operating profit stood at £272m, up from £230m in H1.
“It is our highest growth rate ever achieved. We are pleased with that growth in the COVID era,” Chief Executive Officer Miles Roberts said.
DS Smith also confirmed its statutory profit dropped by 38% to £231m for the 12 months ending in April, down from £368m a year earlier as the pandemic affected its operating at the beginning of the year.
Full-year revenue is down to £5.976bn from £6,043bn a year before.
Ben Nuttall, industrials sector Senior Analyst at Third Bridge commented on DS Smith’s results announcement this morning:
“DS Smith has a number of major challenges. First, DS Smith operates primarily in secondary packaging markets, packaging that is used in supply chains, rather than primary packaging that the customer sees. E-commerce growth is growing rapidly but from a small base, and environmental concerns are taken into consideration in the supply chain but not nearly in the same way that end consumers are. Second, DS Smith is short paper, this means that they buy more paper to make boxes with than they sell, compared to Mondi which is long paper. For DS Smith they hoped that this would flatten peaks and troughs in sales, however, in times when the market for paper is tight, such as the current situation, the danger is not being able to secure enough paper to make boxes with for customers,” said Nuttall.
“Corrugated box volumes have started to accelerate with 8.2% growth in the second half of 2021, but DS Smith had a relatively lacklustre start to 2020, the year of online shopping, despite supplying cardboard boxes to Amazon and having a product that is very environmentally friendly compared to plastic. New box volume growth in H2 was promising and have been driven by FMCG customer gains.”
“DS Smiths revenue growth came in at negative 1%, roughly in line with expectations, but with adjusted operating profit down 24% around 6% under expectations. Over the year it shows the challenges of dealing with rising input costs during times of high volatility.”
 announced on Tuesday that it saw record H2 growth as it benefitted from a boom in online shopping during the pandemic.){kind=link}