DS Smith leads the pack

According to finance chief Adrian Marsh, a range of factors fuelled the rise in profits. SCA Packaging delivered a final €40m (£28.5m) in cost synergies three years after its acquisition. An ongoing policy of tight cash management helped drive underlying operating margins up 130 basis points to 8.8 per cent. The corrugated packaging specialist also continued to woo customers. Mr Marsh says the group made great efforts to listen to buyers regarding how products are displayed, and focused on cutting costs from the supply chain. By aspiring to make containers fast to assemble, flexible and recyclable for manufacturers and retailers, DS Smith outgrew rivals and gobbled up market share.

Indeed, corrugated box volumes increased by 3.1 per cent, which surpassed European market growth of 1.5 per cent and management’s goal of exceeding the continent's GDP growth rate by 1 percentage point. Trading was particularly strong in central Europe and Italy, where constant-currency revenues and adjusted operating profits rose by 11 per cent and a third, respectively. Management also credited an increased stake in Italian recycling business Italmaceri and the purchase of a plastic manufacturing site in Croatia for stellar gains in this growing region. They further expect the recent takeover of Vienna-based packaging business Duropack to increase corrugated volumes in south-eastern Europe by around a third.

DS Smith looks well placed to profit from the economic recovery in Spain, having announced a €190m deal for Iberian manufacturer Grupo Lantero. Mr Marsh says this corrugated packaging operation takes its market share in Spain up to 10 per cent, following the acquisition of Andopack in 2014. Investors will also be pleased that a £101m cash inflow triggered a 21 per cent fall in net debt to £651m, which was 16 per cent lower than brokerage JPMorgan Cazenove's forecast. Analysts there expect adjusted EPS of 26.8p in the financial year to April 2016, up from 24.5p in FY 2015.