Packaging specialist DS Smith's shares have more than doubled since the summer, but mixed market conditions fuelled an 11 per cent fall in operating profits during the period to £48.5m.
In the UK, weaker paper prices in the first half hit paper volumes, although this benefited DS Smith's corrugated packaging sales. Meanwhile, the plastic packaging arm more than doubled its profits, thanks to a restructuring in Europe and new business wins in the US. And the office products arm was buoyed by foreign exchange movements, although the underlying picture was one of a weak home market and a mixed performance in continental Europe.
Supply chain costs are moving up, too. Average waste paper costs were lower than in the same period last year, but prices did move up towards the end of the period on the back of increased demand for waste paper in the Far East. And, while the group's total energy costs fell £9m in the period to £50m, second half energy costs are expected to be £57.7m. Still, cost-saving measures are gathering momentum and should yield annualised savings of £27.5m. The group refinanced its bank facilities last year and now looks well-supported with committed facilities of £525m through to 2012.
Broker Cazenove expects adjusted full-year pre-tax profits of £77.9m and EPS of 8.8p.
DS SMITH (SMDS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 125p | MARKET VALUE: | £491.7m | |
| TOUCH: | 124.7-125.2p | 12-MONTH HIGH: | 139p | LOW: 49p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 111p* | NET DEBT: | 63% | |
| Half-year to 31 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.10 | 44.1 | 4.40 | 2.60 |
| 2009 | 1.02 | 34.2 | 6.00 | 1.50 |
| % change | -7 | -22 | +36 | -42 |
Ex-div: 27 Jan Payment: 2 Mar *Includes intangible assets of £224m, or 57p a share | ||||
