DS Smith warns on 2008 trading

However, announcing its results for the year ended 30 April today (26 June), group chief executive Tony Thorne warned that performance would slow in the current year. "The current financial year's operating performance will be affected by slowing demand and higher input costs,” he warned. “We expect to partly offset the effect of this tougher trading environment through tight cost and cash discipline across all our operations and continued progress in our strengthened packaging converting and office products wholesaling businesses." The 2007/8 results saw revenues jump 11% to £1.96 billion (2006/7: £1.76bn) while pre-tax profit was 39% up at £109 million (£78.5m). Thorne said a tighter supply position for corrugated material had provided good support for Smith’s price increase programme, aimed at recovering the higher input costs it had been incurring for some time. The company was prepared to both acquire businesses and exit those not likely to meet long term strategic objectives, he went on. In the coming financial year the company was prepared for tougher trading conditions, reflecting difficulties in the world economies, particularly those of the UK, the rest of western Europe and the USA. In Packaging, Thorne said the group would concentrate on higher value-added sectors of the market. It plans to extend recycling to take advantage of demand. In Paper, the priority is to reinforce Smith’s position in CCM (corrugated case material), by successfully completing a project to supply high-quality lightweight CCM at its Kemsley Mill near Sittingbourne in Kent where it acquired the adjacent New Thames Paper Mill. The project is expected to cost around £104 million and is expected to come on stream in January 2009. Thorne said the project demonstrated Smith’s commitment to developing its UK business.