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(Alliance News) - DS Smith PLC on Thursday reported a rise annual profit - with box volumes ahead of internal targets - but has opted against a shareholder payout.
For the 12 months to April 30, the London-headquartered packaging firm's pretax profit improved 5.1% to GBP368 million from GBP350 million. Revenue, however, slipped 2.1% to GBP6.04 billion from GBP6.17 billion.
Profit grew despite a drop in revenue, DS Smith said, as it recorded GBP237 million in profit from discontinued operations, compared to GBP12 million the year before.
"We have made good strategic and financial progress in the year, with the disposal of our Plastics division reinforcing our focus on sustainable fibre-based packaging and our strong commercial focus driving record margin," Chief Executive Miles Roberts said.
He continued: "Of course, the year ended with the onset of the Covid-19 pandemic and I am extremely proud of our employees and their tremendous support, working with our suppliers and communities to ensure every factory has remained open throughout the pandemic, delivering essential supplies with outstanding levels of service in this extraordinary time."
DS Smith said its performance in the first 10 months of its financial year was "robust", but then took a "relatively limited" GBP15 million hit from the pandemic in the final two months.
Over the period, organic corrugated box volumes grew 0.6% - ahead of its target of 0.4% growth - with a 1.5% year on year rise in the second half. DS Smith said its volumes in the first 5 months of the second half were ahead of market expectations but April saw a 4.5% decline.
"The progression in the first four months of H2 was driven by strong growth from the Europac business in Southern Europe, progress versus the first half in the North America packaging business, and continued good performance in Eastern Europe. Growth once again has been particularly strong from our multinational customers, particularly e-commerce, where we continue to take an increased share of their business," DS Smith said.
The FTSE 100-listed packaging firm has already declared it would not issue an interim dividend, but has now also decided against a final dividend too - as its short term outlook "remains too uncertain".
Roberts noted "it is premature to resume dividend payments at this stage".
DS Smith added, however, it "will actively consider the resumption of dividend payments", when it has "greater clarity" over its outlook.
Net debt at April 30 stood at GBP2.10 billion, down from GBP2.28 billion at the same point the year before.
In the short term, Roberts said the pandemic is "likely" to hurt volumes and add to operating costs, but the company will continue to focus on efficiency and cash generation.
"In the medium-term, the growth drivers of e-commerce and sustainability are as strong as ever. The Covid-19 crisis is also expected to accelerate a number of the structural drivers for corrugated packaging and our scale and innovation led customer offering positions us well and gives us confidence for the future," the CEO added.
By Paul McGowan; paulmcgowan@alliancenews.com
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