Packaging and office products group DS Smith cut its final dividend to 1.8p, by more than two-thirds, as part of a range of downturn-induced measures. Packaging suffered lower volumes across the division as a result of the weak economic environment and lower selling prices. Profits in paper packaging were also well down, although corrugated packaging performed better.
Office products wholesale suffered from continuing strong competition and lower demand in the UK, although continental Europe offset this with a stronger performance. Office products revenue overall increased by 11.7 per cent, helped by translation benefits from the strong euro and US dollar.
The cost saving and cash generation programme, which includes restructuring and performance enhancement, remains on course to contribute £26m in 2009-10, which at an upfront cash cost of around £27m should generate payback in just over a year. In addition to restructuring costs, the group incurred other exceptional costs of £28.7m, which mostly related to impairment charges against the carrying values of group businesses in Ukraine, Turkey and Italy.
Despite the downturn, the group remained cash-positive, generating operating cash flow of £122.4m against the prior year's £136.2m. Last August, the group extended its financing facilities by renewing its five-year syndicated revolving facility of £287.5m (previously £250m).
Prior to these results, broker Evolution Securities was forecasting 2010 pre-tax profits of £28m and EPS of 5p.
| DS SMITH (SMDS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 63p | MARKET VALUE: | £249m | |
| TOUCH: | 63-64p | 12-MONTH HIGH: | 137p | LOW: 49p |
| DIVIDEND YIELD: | 6.9% | PE RATIO: | NA | |
| NET ASSET VALUE: | 116p* | NET DEBT: | 64% | |
| Year to 30 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 1.63 | 64.3 | 12.2 | 8.4 |
| 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 |
| % change | +7 | -85 | - | -50 |
Ex-div:12 Aug Payment:15 Sep *Includes intangible assets of £222m, or 56p a share | ||||
