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DS Smith PLC on Thursday said profit all but disappeared in the first-half of its financial year, due to a ‘continued challenging market environment’.
The London-based packaging company labelled its performance as ‘solid’ and provided an update on its merger with International Paper Co.
Pretax profit plunged 89% to £29 million in the six months that ended October 31 from £268 million a year earlier. Revenue fell 4.2% to £3.37 billion from £3.51 billion, driven by lower packaging prices and paper market weakness.
DS Smith reported 2% like-for-like box volume growth, but profitability was hurt by input cost increases and a £75 million expense related to the International Paper transaction.inter
DS Smith’s board declared an interim dividend of 6.2 pence per share, up 3.3% from 6.0 pence a year earlier despite the profit decline.
Chief Executive Miles Roberts said: ‘We have delivered a solid performance, with profitability in line with our expectations, despite a continued challenging market environment.
‘Looking forward, whilst recognising the recent paper price weakness, we continue to expect modest growth in packaging volumes and increasing sequential prices to recover higher input costs.’
DS Smith stated that its merger with Memphis, Tennessee-based competitor International Paper Co is progressing as planned. The all-share transaction, recommended by the boards of both companies, received approval from their respective shareholders.
The deal valued DS Smith at approximately £5.8 billion at the time of the offer, with an enterprise value, including debt, of around £7.8 billion.
CEO Roberts said: ‘We are working extensively with International Paper and expect completion in the first quarter of 2025. Our planning for the integration of our businesses is progressing well, and we remain excited about the opportunities for customers, employees and shareholders’
Shares in DS Smith were down 1.2% at 570.10 pence in London on Thursday morning.
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