November 6, 2018 / 7:29 AM / 8 months ago

DS Smith expects first-half profit to be 'materially ahead'

(Reuters) - Packaging company DS Smith (SMDS.L) said it expects adjusted operating profit for the first half of the year to be “materially ahead” from last year as it was able to sell more boxes at higher prices to offset higher production costs.

The packaging company, which supplies corrugated cardboard, recycled paper and plastic packaging to firms including Inc (AMZN.O), said the strategic review of its plastics division was progressing well.

DS Smith, which supplies brands such as Aldi, Tesco, Primark, Auchan and IKEA, has been increasing prices for its boxes to offset higher pulp and paper costs. In September, DS Smith said its margins improved as it sold more boxes at higher prices.

Its consumer goods-focused packaging division has also seen good volume growth in the half year, DS Smith said, adding that overall cash flow will be significantly ahead of last year’s.

The 80-year old company has grown exponentially through acquisitions over the last couple of years, driven by ever-growing demand from e-commerce companies for its recyclable packaging material.

It acquired Interstate Resources in 2017 to expand into the United States, and recently acquired Spanish rival Europac PYCE.MC for 2 billion pounds, its biggest ever deal.

Reporting by Sangameswaran S and Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty and Louise Heavens

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