DS Smith says it has increased profitability due to increased efficiency and supply reliability

The corrugated packaging company said that trade was in line with expectations, “led by pricing momentum and solid cost control,” in their trading statement for the annual meeting of shareholders.

DS Smith does not provide financial data for trading updates; the company’s next set of earnings is not expected until December 8, 2022.

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Almost every business has seen rising input costs, and energy is no exception. However, the energy cost increase was “considerably minimised” by efficiency programmes and a long-term hedging programme.

The statement continued, “We continue to estimate growth of at least 2% for the full year,” despite the fact that first quarter corrugated box volumes were down a little from the previous year and the comparable quarter was up 13%.

To maintain command of its expense projections, the company has made the strategic choice to hedge prices for the next two years, with more than 90% of natural gas expenses hedged for FY23 and roughly 80% for FY24, with costs being recovered through increased packaging pricing.

Also, DS Smith has long-term supplier agreements and other cost management programmes in motion to combat inflation.

The company concluded by stating its strong operating cashflow generation was continuing, and it was maintaining its FY23 outlook of “substantial improvement in performance.”

In spite of the current macroeconomic challenges, we have had a really robust start to the financial year,” stated Miles Roberts, group chief executive. We are grateful for the unwavering support of our clientele and vendor community as we work to achieve the highest standards of supply chain and customer service. Though the manufacturing sector is faltering, our fast-moving consumer goods company is holding strong.

He attributed the company’s improved profitability and cash flow to enhanced efficiency, the reduction of cost increases, and the successful increase in packaging costs.

We are still on track to achieve our medium-term return on investment goal. As we move into the second quarter, we are cognizant of the impact the current economic climate has on our customers and employees. In spite of this, we remain optimistic about FY23 based on our intentions and progress thus far.

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