
© StanRohrer - istockphoto.com
London-based DS Smith has reported 16 percent growth in revenue in the first half of its 2021-2022 fiscal year compared with the first half of its 2020-2021 fiscal year. The company has reported a positive outlook for the year with its last earnings report in April.
According to the company’s latest earnings report, it achieved about 3.36 billion pounds (about $4.4 billion) in revenue in the first half of the fiscal year compared with about 2.89 billion pounds (about $3.82 billion) in revenue in the first half of the 2020-2021 fiscal year.
In the six months ended Oct. 31, its revenue for the period grew by 22 percent on a constant currency basis. The company says this was driven by packaging volume growth and higher selling prices across the group. According to DS Smith, external paper and recycling revenues increased as higher pricing offset reduced volumes sold externally and the company used a greater proportion of its paper production internally to help meet growth needs of its packaging volumes.
During the company’s first-half 2021-2022 fiscal year earnings call Dec. 9, Adrian Marsh, group finance director at DS Smith, said the increased revenue reflects the company’s record box volume growth and higher prices across packaging, paper and recycling. “Together, these more than offset significant cost increases, with operating profit up 26 percent, including a 64 percent increase in the U.S.”
Within the first half of its fiscal year, DS Smith reports that it achieved record corrugated box volume growth of 9.4 percent compared with the same time period in its 2020-2021 fiscal year. The company says volume growth has risen 8.8 percent over the last 12 months, reflecting continued growth in the fast-moving consumer goods sector, which represents 80 percent of DS Smith’s volume. Additionally, the company says strong pricing has helped to mitigate input cost pressures as well.
DS Smith reports that its U.S. business is growing and achieved 36 million pounds (about $47.54 million) in profits for the first half of the year, which the company says is up 64 percent in adjusted operating profit growth in the first half of the 2021-2022 fiscal year compared with the first half of the 2020-2021 fiscal year. Corrugated box volume growth contributed to the strong U.S. profits, with higher box pricing offsetting input cost increases.
“We are continuing to benefit from a very dynamic market with demand for packaging for different retail solutions evolving rapidly and COP26 intensifying the desire for sustainable packaging solutions for the circular economy,” says Miles Roberts, group chief executive of DS Smith. “Our leadership in these areas has contributed to record volumes with particularly strong growth in the U.S. and Southern Europe regions, where we have invested recently, as well as with our multinational [fast-moving consumer goods] customers."
He continues, “Our supply chains have remained secure, and the significant increases in input costs have been mitigated by effective hedging of energy cost, our long-term supplier agreements and raising packaging prices. Combined with strong volume growth, this has significantly increased our profit with continuing good progress recovering from the impacts of COVID-19.”
Regional breakdown
In Northern Europe, DS Smith reports that organic corrugated box volume growth was strong for the first half of its fiscal year, with particularly good performances in the Nordics, Benelux and Germany. The company says its U.K. performance was good against strong comparatives from the 2020-2021 fiscal year. For this region, revenues increased by 20 percent compared with the same time frame in its previous fiscal year due to increases in corrugated box volumes and pricing as well as the impact from an increase in sales price for externally sold paper and recovered fiber. Adjusted operating profit grew 30 percent, reflecting the drop of packaging volume growth to operating profit, together with increased pricing in packaging, recycling and external paper sales offsetting increased input costs for old corrugated containers (OCC).
In the Southern Europe region, DS Smith reports strong growth in volumes for the first half of its 2021-2022 fiscal year that have been driven by Iberia, in particular. Revenue in the region grew by 27 percent due to the impact of higher box volumes and increases in both box and paper pricing. Adjusted operating profit grew by 28 percent in the first half of the fiscal year compared with the same period last year, with packaging operations benefiting from higher paper prices.
In Eastern Europe, DS Smith says organic corrugated box volumes have growth faster than the group average. Revenues grew 26 percent in the first half of the year for this region compared with the same time period last year, which reflects increases in corrugated box volumes and pricing. However, adjusted operating profit fell 11 percent in this region, reflecting the timing lag in the recovery of higher paper prices through increased packaging pricing.
DS Smith’s North America region reported strong increases in the first half of the fiscal year compared with the same period last year, according to the company’s earnings report. The company plans to ramp up a box plant in Indiana in its 2022-2023 fiscal year. Revenues for this region increased by 7 percent compared with the same time period last year, reflecting the packaging volume growth and the increase in export paper prices that offset reduced volumes in external paper sales. Adjusted operating profit grew by 64 percent as well.
Sustained focus on sustainability
During the company’s earnings presentation, Roberts noted that the circular economy and sustainability remained important to consumers. Increasingly, he said, consumers are concerned about the recyclability and actual recycling of packaging.
Sponsored Content
Shredding tough materials with a small footprint
Discover how SSI’s innovative M120 EX Dual-Shear® shredder is revolutionizing recycling with its unique stacked chamber design and SmartFeed® technology—delivering powerful, space-efficient, and adaptive shredding for hard-to-process materials like plastics, metals, and fishing nets. Watch the video and read the full article to see this next-generation shredder in real-world operations.
He said, “As Europe’s largest fiber recycler with extensive recycling operations across Europe with 100 percent recyclable products and our approach to a fully closed loop where we collect waste products from our customers and convert it into packaging, we’re seeing a number of customers awarding new long-term contracts on the basis of a closed loop. … We’ve just secured a significant new contract with a very large customer … where our closed-loop offering was instrumental to us securing that business."
He continued, “And, of course, in plastic replacement, the new taxation on plastics, combined with consumer awareness is seeing an acceleration in the conversion of plastic to fiber.”
In the past year, DS Smith replaced 54 million plastic products with fiber-based products. Roberts said he expects the rate of this change “to increase over the coming years.”
Roberts concludes, “We have built a business to benefit from the significant structural growth drivers within fiber-based corrugated packaging. These benefits, combined with our scale, geographic footprint, sustainability and innovation focus, position us very well for continued volume and market share growth. Together with pricing momentum, this underpins our confidence to deliver a significant improvement in profitability during the second half of this year in line with our expectations and towards our medium-term targets.”
Get curated news on YOUR industry.
Enter your email to receive our newsletters.
Latest from Recycling Today
- PureCycle to supply PureFive resin to P&G
- Sustane enters pyrolysis oil offtake agreement with BASF
- Curbside Management acquiring Sonoco recycling facility
- Commentary: Why PVC recycling can only scale with a systemic approach
- Untha opens Technology Innovation Center
- Recology releases 2025 sustainability report
- Beauty packaging nonprofit Pact Collective releases 2024 Impact Report
- Cascades sells South Carolina tissue mill