New chief executive Miles Roberts is continuing his review of DS Smith's operations, although the packaging and office products group delivered a solid performance across markets that - despite still being challenging - are showing signs of recovery . Mr Roberts recognises that his is an inherently low-margin business, although he sees scope to improve the business mix towards higher value activities.
Still, the European industrial sector is picking-up and the high-end fast moving consumer goods (FMCG) sector "never missed a beat" in volume terms, according to Mr Roberts. That FMCG strength bodes well for the group, which supplies the sector with recycled packaging material in the UK and continental Europe, most notably France, Italy and Poland. The UK business is vertically integrated and, while the recycled paper operation was hit by overcapacity, the model of producing packaging from collected and recycled waste is proving attractive to customers. What's more, the Spicers office products wholesaling business returned a better result, improved efficiency and increased market share.
Prior to these results, Evolution Securities was forecasting pre-tax profits of £76.3m for 2011 and EPS of 13.4p.
| DS SMITH (SMDS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 118p | MARKET VALUE: | £464m | |
| TOUCH: | 118-119p | 12-MONTH HIGH: | 147p | LOW: 58p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 121p* | NET DEBT: | 51% | |
| Year to 30 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 1.65 | 11.0 | 1.1 | 8.4 |
| 2007 | 1.77 | 78.5 | 15.6 | 8.6 |
| 2008 | 1.97 | 109 | 19.6 | 8.8 |
| 2009 | 2.11 | 16.8 | -3.0 | 4.4 |
| 2010 | 2.07 | 55.0 | 9.7 | 4.6 |
| % change | -2 | +227 | - | +5 |
Ex-div:11 Aug Payment:14 Sep *Includes intangible assets of £221m, or 56p a share | ||||
