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(Alliance News) - Packaging firm DS Smith PLC on Wednesday said its trading it still progressing well, with trends and momentum persisting into the second half of its financial year.
"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," the London-headquartered company said.
DS Smith said like-for-like corrugated box volume growth accelerated in its third financial quarter ended January 31 compared to its second quarter. This as expected e-commerce and fast moving consumer goods strength from the Christmas period continued into 2021.
There were also "encouraging signs of recovery" from the FTSE 100-listed company's industrial performance.
In terms of region, northern Europe and North America demonstrated "the most positive performance" in the third quarter thanks to continued strong growth among DS Smith's largest customers combined with increasing utilisation of its plant in Indiana.
As a result of strong domestic volumes growth, as well as reduced paper exports and better pricing, North America "continues to deliver significantly improving results" for DS Smith.
The firm added that its volume growth reflects a "strong performance" over many customer groups and sectors.
More negatively input costs, including old corrugated cases, were higher in the period, along with high demand, which drove up paper prices. DS Smith has begun to recover additional costs by raising packaging prices and expects to fully recover these "with the customary lag". This will underpin continuing momentum in its 2020 financial year.
DS Smith said its working capital and cash generation are still "key areas of focus" for the firm and its expects "continued strong free cashflow" for financial 2021, with cash conversion at more than 100%.
The company highlighted its companywide recycling rates of 99%, and the fact that it collects and recycles more packaging than it makes.
Chief Executive Miles Roberts said: "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."
Shares in DS Smith were up 0.7% at 405.90 pence in London on Wednesday morning.
By Anna Farley; annafarley@alliancenews.com
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