Paper recycling and production giant DS Smith today highlighted the ‘sustainability’ of paper and UK uncertainties around Brexit as boosting performance within the business.
In a positive three monthly trading statement, group chief executive Miles Roberts singled out Eastern Europe as a “standout” region and said that the company’s big customers there continued to expand. And he added: “Some customers are moving production from the UK to Eastern Europe with all the uncertainties in the UK and we are benefiting from that.”
DS Smith, which is the UK’s largest manufacturer of cardboard from used cardboard boxes and mixed paper, and which has operations in the United States and across Europe, highlighted a “focus on sustainable packaging” in the trading statement which covers the period since May 2018.
DS Smith today reported a positive performance over the summer
In particular this relates to the plastics market and Mr Roberts, speaking about the period since May said that there was more to come in terms of a move by customers to more sustainable products. “We are still at the early stage of it, not the complete replacement of plastic, but the steady erosion, taking plastic out wherever possible.”
He remarked: “A number of customers have been surprised as to how easy it is to change to a more sustainable solution, there is nice structural market growth there.”
Plastics review
Alongside the growth in demand for cardboard and paper products, DS Smith is reviewing its plastic operations which include products for the pharmaceutical and packaging sectors with a sale possible. The chief executive said that there is “quite a bit of work to do on the asset and prepare it for what we want to do. We have a lot of inbound interest, it is a very attractive business which has grown quite nicely, and we remain very optimistic about the attractiveness of this asset.
E-commerce (with the consequent demand for cardboard packaging) continues to boost demand for the company’s products. Mr Roberts said currently this accounted for about 12% of orders, growing about 15% per annum which would give an extra 1% this year.
Cardboard
In terms of used cardboard – OCC – Mr Roberts described the market as “very fluid” and suggested that prices for the next six months will remain “subdued”.
He pointed to the tariffs put on between the US and China. “We expect the very tight restrictions on imports to China to remain there, it is interesting that China is not importing the amount of OCC it has licences for, all around the quality.
“What does that mean for OCC pricing? Collection rates continue to improve… and it is difficult to see why that will change.”
Mr Roberts also noted that there is “very strong demand for paper in the US and Europe”.
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Source: letsrecycle.com Plastic
