DS Smith in shape for year

Recycled packing firm DS Smith said it continue to expect substantial year-on-year EPS growth and views the remainder of the year with confidence.

In an update for the half-year to October 31st 2012 the corrugated boxes maker said its packaging business is performing in line with expectations, with margins for the business as a whole, including SCA Packaging, expected to be within the previously stated medium-term target range of 7-9%.

DS said this has been achieved through a combination of improving business mix together with pricing discipline and cost control.

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Northern Europe and Western Europe have performed particularly well in the period, whilst the UK has been held back by its high exposure to the paper cycle, the group explained.

The Plastic Packaging business saw continued growth as customers increase their use of bag-in-box for the transportation of liquids.

Commenting on the integration of the SCA Packaging business, it expects to deliver €100m of annual cost savings, €130m of cash savings and €100m in proceeds from disposals of surplus property and non-core businesses by the end of year three.

DS expects the ratio of net debt to EBITDA to fall below 2.0x by April 2013, a year earlier than expected.

Chief Executive Miles Roberts commented: "DS Smith is resilient and well placed to create further substantial value for our investors. With the integration of the recently acquired SCA Packaging business going to plan, we continue to focus on strengthening the business across a significantly enlarged geographic footprint."

"The transaction transforms our ability to serve customers on a pan-European basis, while improving the efficiency of our operations," he added.

CJ