DS Smith plc (SMDS.L) said Thursday, in its Interim Management Statement, that third quarter trading was ahead of management's expectations, supported by better than expected sales across Packaging and Office Products Wholesaling. Further, the company said it is confident of meeting its expectations for the fiscal 2010. The group is slated to unveil preliminary results for the financial year to April 30 on June 24.
The Maidenhead, UK-based company's results were underpinned by the actions taken to cut costs, raise productivity and generate cash. Also, the group said financial position since the publication of the results for the six months to October 31, 2009 did not record any significant change. Cash flow generation remained strong.
In packaging segment, demand for corrugated packaging in the European market continued to recover, although it didn't surpass the levels achieved in 2007. In corrugated case material, or CCM, price hike was implemented in September and October 2009 and the group continued the programme of increasing box prices. These measures enabled progressive recovery of significantly higher input costs incurred in the second half of the last calendar year, said the group.
Further, as it witnesses upward trend in cost of its key raw material, waste paper, the group advised its customers of a further increase in CCM prices. Restructuring, cost cutting and sales into new markets facilitated continued recovery in profits noted in the first half, in the Plastic Packaging segment.
Spicer's sales performance continued to be good, despite slowdown in the European economy that affected demand for office products across markets. The UK business performance continues to improve and began to come through in the results, driven by actions taken, said DS Smith. The company said, outside the UK the combined profits were in line with prior year.
DS Smith noted that it continue to face both the uncertainty surrounding the strength of the economic recovery and the need to recover rising input costs. Nevertheless, the company said its business performance remains encouraging and management is confident of meeting its expectations for the year to April 2010.
In December, the company's half-yearly profit before tax for the was GBP 34.2 million on revenues of GBP 1.02 billion.
SMDS.L is currently trading at 123.80 pence, up 1.31% or 1.60 pence, on the LSE.
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