DS Smith reports good trading

Recycled packaging firm DS Smith (LON:SMDS) said today that trading since the end of April has been good with a strong combination from its acquisition of Otor.

Like-for-like volumes in corrugated packing are up three per cent and in line with group targets, which the firm said reflected its resilient fast-moving consumer goods customer base. At the same time, the group continues to make progress on margins.

Like-for-like revenue growth across all the group’s packaging businesses was increased 13 per cent, reflecting the recovery of substantial cost increases as well as underlying volume growth. The firm said it was focused on completing the process of recovering these cost increases by seeking to differentiate itself through high standards of service, quality and innovation.

Smith also reported that conversion of profit into operating cash flow has been robust due to a continued focus on working capital, which has fallen in absolute terms (year-on-year) despite both the acquisition of Otor and increased raw material prices.

Trading during the business benefited from the inclusion of Otor (now DS Smith Packaging France), which performed well both in terms of revenue growth and delivery of previously-announced, and ongoing, cost savings of €13 million. The firm also continued to make good progress with procurement and UK efficiency savings. Combined these programmes are on track to deliver £6 million in total cost savings in 2011.

Smith said it remains confident in the trading outlook for the year.

Shares in the firm were trading for 199.5 pence each at lunchtime today, some 1.3 per cent  on their opening price.