DS Smith Plc ("DS Smith" or "the Group"), the international supplier of recycled packaging for consumer goods, recently published its Interim Management Statement in respect of the period since 30 April 2011.
Trading in the period has been good with a strong contribution from the successful acquisition and integration of Otor (now DS Smith Packaging France). Like-for-like volumes in corrugated packaging are up 3%, in line with our previously announced Group targets, reflecting our resilient fast-moving consumer goods (FMCG) customer base and, at the same time, we have continued to make progress on margins.
Conversion of profit into operating cashflow has been robust due to a continued focus on working capital. Working capital has fallen in absolute terms, year-on-year, despite both the acquisition of Otor and increased raw material prices raising the value of inventories and debtors.
There has been no significant change to the financial position of the Group since the publication of our results for the full year to 30 April 2011.
The company has seen strong like-for-like revenue growth of 13% across the packaging business, reflecting the recovery of substantial cost increases as well as underlying volume growth. We remain focused on completing the process of recovering these cost increases by seeking to differentiate DS Smith through the high standards of service, quality and innovation that we offer. Customer take-up of our proprietary corrugated product R-Flute® in the UK remains very good and we are also seeing growing demand in France, where we are now manufacturing R-Flute® at two of our sites.
Trading in the period benefits from the inclusion of DS Smith Packaging France, which is performing well both in terms of revenue growth and progressive delivery of the previously announced cost synergies of €13 million. We also continue to make good progress with the previously announced procurement and UK efficiency savings. These programmes are on track to deliver the expected £6 million in total cost savings in 2011/12.
