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RNS Number : 9360Q
Smith (DS) PLC
03 March 2021
3 March 2021
DS Smith Plc - Q3 trading statement
Leaders in the Circular Economy
DS Smith Plc ("DS Smith"), today issues a trading update in
respect of the period since 1 November 2020.
Trading update
Trading continues to progress well, with the trends and momentum
described in our H1 results on 10 December 2020 continuing into H2.
We are seeing particularly strong box volume performance driven by
our differentiated offering, and whilst input costs have increased,
overall trading continues in line with our expectations.
Group like-for-like corrugated box volume growth has accelerated
compared to Q2 of our financial year, with the expected e-commerce
and FMCG strength over the Christmas period continuing into 2021,
together with some encouraging signs of recovery from our
industrial customers. Our Northern European and North American
regions have seen the most positive performance, reflecting
continued strong growth with our largest customers and increasing
utilisation of our plant in Indiana.
Our North American business continues to deliver significantly
improving results as a consequence of good domestic volume growth,
with corresponding reduced exports of paper, and increasing
pricing.
The volume growth reflects our strong performance across many
sectors and customer groups. We are providing our customers with
more ways and easier options to do business with us via our leading
digital platforms that are proving to be very popular. These
platforms are fully aligned with our unique Circular Design
principles, to enhance recyclability and reusability of our
products.
Input costs, including OCC, have increased during the period
which, together with high demand, continues to drive higher paper
prices. We have started to recover these additional costs through
higher packaging prices and our expectation is, with the customary
lag, they will be fully recovered and underpin continued momentum
into FY22.
Working capital and cash generation remain keys areas of focus
and we anticipate a continued strong free cashflow performance for
the full year with cash conversion over 100 per cent.
Sustainability update
We are a leader in sustainability and operate a circular
business where we collect and recycle more packaging than we
produce. We are focused purely on fibre-based products and that is
why our recycling rates are 99% companywide. We build in
recyclability, reuse and plastic replacement into our packaging
through our Circular Design principles, at the heart of our 'Now
and Next' Sustainability strategy, launched in the autumn 2020.
Since the start of the calendar year, we are delighted that our
rating within the MSCI ACWI Index has increased from A to AA and
our ISS ESG rating had increased, retaining our Prime status. As
one of only 16 strategic partners of the Ellen MacArthur
foundation, we have piloted and scored A- in its Circulytics index
designed to ensure greater recyclability within packaging.
Miles Roberts, Group Chief Executive, said:
"The Group has delivered a robust performance during the period
against a challenging macro-economic environment, and I remain
immensely grateful and proud of our colleagues for their commitment
to keeping our plants safe and operational and continued support
from our customers.
We are seeing excellent demand from FMCG and e-commerce
customers for our sustainable packaging products and solutions and
we continue to invest for growth in these areas. COVID-19 is
accelerating a number of the structural growth drivers and with our
leading position in recycling and fibre-based packaging we are well
positioned to capitalise and drive further market share gains.
While the economic environment remains uncertain due to
Covid-19, we are experiencing good momentum across the business in
both Europe and North America. We are confident in delivering
results in line with our expectations for the year and showing
further good progress and momentum as we move into the next
financial year."
Conference Call
A conference call for analysts and investors, hosted by Miles
Roberts, will take place today, 3 March 2021 at 8.00am London time.
The dial-in number is:
UK/International +44 (0) 33 0551 0200
UK Toll Free 0808 109 0700
Password DS Smith
A play-back facility of this call will be available until 10
March 2021. The dial-in number is: +44 (0)20 8196 1480, access pin
0775645#. A recording and transcript of the call will also be
available through the Investor Relations section of our website:
https://www.dssmith.com/investors/results-and-presentations
Enquiries
DS Smith Plc
Investors +44 (0)20 7756 1800
Hugo Fisher, Group Investor Relations Director
Rachel Stevens, Investor Relations Director
Media
Greg Dawson, Group Corporate Affairs Director
Brunswick +44 (0)20 7404 5959
Dan Roberts, Sophia Lazarus
About DS Smith
DS Smith is a leading provider of sustainable paper-based
packaging worldwide which is supported by recycling and papermaking
operations. It play a central role in the value chain across
sectors including e-commerce, fast moving consumer goods and
industrials. Through its purpose of 'Redefining Packaging for a
Changing World' and its Now and Next sustainability strategy, DS
Smith is committed to leading the transition to the circular
economy, while delivering more circular solutions for its customers
and wider society - replacing problem plastics, taking carbon out
of supply chains and providing innovative recycling solutions. Its
bespoke box-to-box in 14 days model, design capabilities and
innovation strategy sits at the heart of this response. DS Smith
operates in 34 countries employing around 30,000 people and is a
Strategic Partner of the Ellen MacArthur Foundation.
Cautionary statement
This announcement contains certain forward-looking statements
with respect to the operations, performance and financial condition
of the Group. By their nature, these statements involve uncertainty
since future events and circumstances can cause results and
developments to differ materially from those anticipated. The
forward-looking statements reflect knowledge and information
available at the date of preparation of this announcement and DS
Smith plc undertakes no obligation to update these forward-looking
statements. Nothing in this trading statement should be construed
as a profit forecast.
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