Despite a fall in profits in the 2020/21 financial year due to the Covid-19 pandemic, DS Smith has said that it is “ideally placed” to recover, particularly as e-commerce grows.
The paper mill and recycling business this morning (22 June) posted it’s results for the 2020/21 financial year which showed profits had fallen by 37% (see letsrecycle.com story).
Miles Roberts said the company is ‘ideally placed’ to recover
At a webinar to discuss the results, DS Smith’s chief executive Miles Roberts explained that the group is entering the new financial year with “real momentum”.
Mr Roberts outlined that despite the fall in profits there has been positive increases in other areas, such as an accelerating corrugated box volume growth, which rose by 8.2% in the second half of the year, and an ever-growing trend in e-commerce sales.
Uncertain market
In a question and answer session at the webinar, Mr Roberts reasoned that although there is a very positive outlook for the next financial year, the business recognises that the pandemic continues.
He noted: “We are making good recovery, and we have less debt and rising prices, but we recognise there is still some uncertainty. We are absolutely committed to getting back to our targets, and I have no doubt we will, but we are mindful that we are still in a slightly uncertain market. There is a very positive outlook for the next financial year but we are not out of the pandemic yet.”
Customer relationships
Mr Roberts added that although the pandemic continues to make the market uncertain, it has “deepened” customer relationships.
He explained: “Our customers have been looking to us even more so than in the past for security of supply. We have been responsiveness to their changing needs, as well as to the final consumer. Throughout the pandemic, we have been there to support them and work collaboratively with them.”
‘Major challenges’
Meanwhile, in a statement sent to letsrecycle.com this morning Ben Nuttall, senior analyst at research firm Third Bridge, argued that DS Smith faces a number of “major challenges”.
Although covid-19 impacted the business, it strengthened its customer relationships
He explained: “DS Smith operates primarily in secondary packaging markets, packaging that is used in supply chains, rather than primary packaging that the customer sees. E-commerce growth is growing rapidly but from a small base, and environmental concerns are taken into consideration in the supply chain but not nearly in the same way that end consumers are.”
He added that there is a danger of the business not being able to secure enough paper to make boxed with for customers.
Mr Nuttall continued: “Corrugated box volumes have started to accelerate with 8.2% growth in the second half of 2021, but DS Smith had a relatively lacklustre start to 2020, the year of online shopping, despite supplying cardboard boxes to Amazon and having a product that is very environmentally friendly compared to plastic.”
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Source: letsrecycle.com Packaging
