Full Year Results 

DS Smith managing the balancing act

DS Smith managing the balancing act

A fortnight prior to release of these full-year figures, DS Smith (SMDS) announced that it was acquiring Spanish rival Europac for an enterprise value of €1.9bn (£1.66bn). The acquisition promises to strengthen the packaging heavyweight's supply chain, certainly a plus point given the volatility of kraftliner and recycled paper prices over the past 18 months or so. Although the deal will be partly funded by a rights issue, the group expects to have net debt to cash profits of “less than 2.5 times by the end of the current financial year”. Although well short of the 3.25 multiple governing financial covenants, there will be intensified focus on the ability to generate adequate operational cash flows to support financing and shareholder returns.

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