June 13, 2019 / 11:51 AM / 2 months ago

BUZZ-Packaging firms top FTSE on hopes of recovery in Germany

** Shares of European packaging giants rise, with DS Smith up 7.2%, Smurfit Kappa 4.7% and Mondi 3.3%

** DS Smith posted 31% jump in FY adj. pretax profit, aided by higher volumes, sales price and margins

** Co says box volumes growth slowed due to previously flagged weakness in export market Germany during H2, but expects improvement this year

** Germany benchmark recycled (testliner) prices were flat & virgin (kraftliner) containerboard prices declined about 10 euros per tonne or about 1% month-on-month (MoM) in June vs May - Euromoney’s price reporting agency RISI

** “This pricing (RISI data) stabilisation MoM is encouraging and what we had hoped for,” Jefferies analysts said

** With DS Smith revealing 40-60 euros per tonne containerboard price increases, broadly similar to early announcements from peers, we see increasing support for containerboard price stability from here: Jefferies

** DS Smith raised its medium-term margin target to 10-12%, after recording margins of 10.2% this year, beating its 8-10% guidance range

** Smurfit Kappa second-biggest gainer on blue-chip index , DS Smith third biggest, Mondi fourth biggest

** YTD, DS Smith up 20%, Smurfit Kappa 16%, Mondi 7% (Reporting by Justin George Varghese in Bengaluru)

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