Acquisitive packaging company group DS Smith Plc has reported a surge in revenue and profits driven by growing demand from online retailers, strong demand in European markets and the integration of businesses it has bought recently.
The FTSE 100 company posted a 21pc jump in revenues to £5.8bn in the year to the end of April, though this was lifted by currency movements. Stripping these out the rise was 17pc.
Pre-tax profit was 11pc better than last year at £292m, although, accounting for currency changes, the figure was 8pc higher. Adjusting for one-off costs and amortisation, profit was up 21pc at £473m.
The strong performance came despite DS Smith facing higher paper and pulp prices after China imposed an import ban on paper waste.
The growth in e-commerce has made packaging manufacturers a hot property as goods bought online need to be parcelled up for delivery.
DS Smith, which makes corrugated cardboard, recycled paper and plastic packages, has landed Amazon as a customer and the online retailer’s growth has helped fuel the packaging business.
Miles Roberts, chief executive of DS Smith, said the company is being boosted by what he called “the explosion that we're seeing in e-commerce, which I firmly believe is still in its infancy of where it can develop to”.
He added that growth in Europe and the US markets the company serves is averaging 2pc with a structural change as customers' “households are becoming smaller, resulting in consumers shopping more frequently, higher discretionary spend and buying smaller quantities at each time… driving the use and quantities of packaging.”
To capture as much of the growing market as it can, the company has made a string of acquisitions recently. In the period covered by the results it bought Romanian companies EcoPack and EcoPaper, along with US-based Interstate Resources.
Since then it has announced it is buying another US rival, Corrugated Container Corporation, and earlier this month announced the £1.45bn purchase of Spain-based packaging business, Europack, a deal which will be funded by a £1bn rights issue.
Shares in DS Smith edged down 2pc, because, although the results were in line with industry analysts’ consensus forecast, the company failed to deliver a hoped-for outperformance.