In its update for the half year ending October, 31, 2008, DS Smith reports an overall trading performance in the first half of financial year 2008/09 “broadly in line with our expectations”. The group’s operating results are being impacted by lower demand and higher input costs.
Margins in the paper and corrugated packaging businesses continue to be affected by the weaker market conditions and higher energy and raw material costs. In the UK, the group is implementing a further price increase for corrugated products to recover the most recent rises in input costs. The project to commission the lightweight corrugated case material machine at Kemsley Mill in January 2009 remains on schedule.
The continental European corrugated businesses continue to make progress, assisted by the strength of the Euro. In plastics packaging, the group has raised prices to recover higher input costs and is benefiting from the actions taken in liquid packaging and dispensing. However, it states, these factors have been more than offset by the effects of lower sales volumes, particularly in returnable transit packaging.
The update concludes: “We continue to expect the group to achieve a robust performance in 2008/09, despite the level of demand in our markets and trends in input costs. Our priority remains to enforce tight operational discipline, focusing particularly on operating cash generation.”
DS Smith will announce its results for the six months to October 31, 2008, on December 3, 2008.
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