Thursday, 4 December 2014

DS Smith - Interim Results

DS Smith is a leading provider of corrugated packaging in Europe and of specialist plastic packaging worldwide. They operate across 25 countries and employ around 21,500 people. It is the UK's leading producer of recycled paper board and manufacturer of corrugated packaging

The company has developed to become a European leading provider of consumer packaging with emphasis on state-of-the art packaging design. It is the largest paper recycler in Europe, collecting around 5.4m tonnes annually, a market leading recycling and waste management company

DS Smith rejoined my portfolio following the final results last June - here’s a link to a post.

The company has today reported a strong set of interim results for the half year to end October (link via Investegate) with adjusted profits up 17% (constant currency) at £176m and earnings per share up 24% at  12.9p.

Chief Executive Miles Roberts said: "We are pleased with performance in the first half of this financial year. We have continued to make good progress with our customers, benefitting from our differentiated commercial offering, and this has translated into strong financial performance, with a particularly good progression on margins and returns as well as excellent cash flow generation. We continue to actively manage our business portfolio and are excited by the opportunities for the Group.

Our outlook remains positive as the business continues to grow, despite ongoing economic headwinds in many of our markets. The Board expects continued performance in line with the Group's medium term financial targets."

Free cash flow is strong at £151m (£110m 2013). Net debt reduced to £694m (from £827m - April 2014).
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The group has increased the interim dividend by 16% to 3.7p (3.2p 2013) - I‘m not sure why investors have to wait 6 months to receive it! The target dividend cover is 2.0x  - 2.5x earnings

Since the period end, the company has announced the acquisition of Andopack, a Spanish corrugated packaging business. They have also announced today  having entered into a letter of intent with a view to acquiring a corrugated packaging business in Turkey and Greece.

The results were well received by the market and the share price was up over 5% closing at 304p. More on this following the final results next June.

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