Reporting on the four month period since 1 November 2015, the company said volume growth has been good, particularly in Western Europe and South Eastern Europe, where customers have reacted positively to services such as the design and innovation capability.
This is in contrast to the tough half-year period 31 October 2015, when group revenue declined 1% to £1.95bn.
“Growth from pan-European customers continues to benefit from our increased scale and coverage and reflects our continued investment in quality, service and innovation,” read the statement.
Return on sales and return on average capital employed have both shown further improvement versus the comparable prior year period, reflecting the benefit of operating leverage and the strength of our business model.
JP Morgan analysts increased their adjusted PBT estimates by 2% for FY2017 and FY2018 to take account of a lower GBPEUR assumption.
“It is implicit in the company’s statements that it is in line with its medium term targets that volume growth continues to around GDP +1%. Our unchanged estimate for FY2016 organic growth in corrugated volumes is 3%,” read a JP Morgan statement.
It added that its forecast includes a 2% increase to operating profit in FY2017 from £407m to £417m and a 2% increase in FY2018 from £424m to £434m.
DS Smith completed the acquisition of Milas Ambalaj on 23 January 2016, a producer of specialist corrugated packaging and displays in Turkey, and said integration from this deal and other acquisitions last year continue to deliver in line with expectations.
“Our outlook remains positive as volumes and financial returns continue to grow, despite ongoing challenging market conditions. The Board continues to anticipate performance in line with our medium term financial targets and views the remainder of the year with confidence.”
Miles Roberts, group chief executive, said: “We are pleased with progress in the year to date as we continue to grow organically and integrate the businesses acquired over the past year, with a positive customer reaction. We aim to continue to develop our high quality packaging offering while extending our geographic reach. The performance of the business, together with the customer and market opportunities for growth, gives us confidence for the future.”
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