Packaging business DS Smith posted significantly improved full-year profits on Tuesday despite experiencing “another year of volatile trading conditions”.
DS Smith posted a 21% year-on-year improvement in reported revenues to £7.24bn, partly driven by price increases implemented to offset significant cost inflation, pushing adjusted operating profits up by 23% to £616.0m and pre-tax profits ahead by 64% to £378.0m.
The FTSE 100-listed group said statutory basic earnings per share had grown 53% to 20.4p and also hiked its full-year dividend per share by 24% to 15.0p.
Net debt was cut to £1.48bn from £1.79bn and free cash flow improved to £519.0m from £486.0m thanks to increased profitability and a positive working capital inflow of £215.0m more than offsetting the £100.0m increase in capital expenditure to £431.0m.
DS Smith stated it had delivered record like-for-like corrugated box volume growth of 5.4%, a “strong” operational and financial performance from its European unit, and continued US progress with underlying earnings growth of 31% and a return on sales of 13.4%.
Looking forward, chief executive Miles Roberts said: “The new financial year has started well, building on the momentum from the previous year. Whilst there remains considerable uncertainty about the overall economic environment, our expectations remain unchanged. Strong customer demand reinforces our confidence to invest in the business, with capital expenditure expected to further increase in the current year.
“We currently expect to see 2-4% growth in our volumes, aided by our focus on resilient end markets, a strong performance in the US, and the opening of new sites in regions where demand is buoyant. This growth, combined with the benefits of ongoing pricing momentum and careful management of our cost base gives us confidence for the year ahead and is expected to result in a further substantial improvement in our performance.”
Reporting by Iain Gilbert at Sharecast.com
