DS Smith (SMDS) had an extra two months-worth of income from 2012's acquisition SCA during the period - and it showed. Revenue grew by a quarter and underlying operating profit surged 31 per cent to £160.2m, but crucially, the business is also growing organically and the packaging company is highly geared to any upturn in the European economy.
SCA accounted for almost three-quarters of the increase in revenue and over half the rise in profit. Smith exited a lot of low-margin work in western Europe, too, leaving volumes there flat. But even after stripping out both SCA and helpful currency fluctuations, the top line still grew 1.8 per cent. Much of the increase was driven by higher prices and market share gains, which generated volume growth of 2.2 per cent - that easily eclipsed the 1.3 per cent implied by Smith's own target of GDP plus 1 per cent. Profit rose by 9 per cent like-for-like, too, with cost savings offsetting higher paper prices. Smith found €20m (£16.7m) of savings during the period, which nudged up group cash profit margin by 40 basis points to 7.7 per cent.
Investec Securities expects full-year adjusted pre-tax profit of £259m, giving adjusted EPS of 21.3p (from £211m and 17.3p in 2013).
DS SMITH (SMDS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 312p | MARKET VALUE: | £2.91bn | |
| TOUCH: | 312-313p | 12-MONTH HIGH: | 320p | Low: 202p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 124p* | NET DEBT: | 67% | |
| Half-yearto 31 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.67 | 55.8 | 4.6 | 2.5 |
| 2013 | 2.08 | 85.0 | 7.5 | 3.2 |
| % change | +25 | +52 | +63 | +28 |
Ex-div: 2 Apr Payment: 1 May *Includes intangible assets of £1bn, or 109p a share | ||||
