DS Smith's savings soar

Clearly, SCA flatters these results, generating most of the 77 per cent growth in underlying operating profit to £251m. That included €40m (£34.2m) of cost cuts, which Smith now thinks will total €120m, or 20 per cent more than previous estimates. Admittedly, most of the extra benefit fell in the year just gone, but there is more to come and that should underpin profit forecasts for 2014. But there is still work to be done. Integrating SCA cost almost £58m and, although volumes there are on an "improving trend", they're still no match for Smith's legacy business. And SCA's inferior returns, plus a paper business that just broke-even last year, hammering profits in the UK, dragged group margins below Smith's 7-9 per cent target range. Still, finance director Steve Dryden is confident SCA will improve on this performance - growing sales of recycled corrugated packaging to makers of fast-moving consumer goods will certainly help.

Broker JPMorgan expects adjusted pre-tax profit to £208m, giving adjusted EPS of 21.8p (from £166m and 17.4p in 2013).