DS Smith sees first half 'substantially' ahead

14th Oct 2009 07:39

Cardboard and paper supplier DS Smith said first half pre-tax profits will be 'substantially' ahead of expectations, although lower than last year's levels.This reflects a slower erosion of selling prices within packaging and a faster reduction in operating costs than originally envisaged, the group said. The planned annual cost savings of £26m will be achieved this financial year. A sustained reduction in working capital is contributing to lower debt levels and reduced financing costs.'We remain cautious about the second half of the year, principally due to the impact of the previously advised input cost increases which have begun to affect our results,' said the group.'We are implementing price increases to recover these costs, but given the usual delay, full cost recovery will take us beyond the end of the financial year.''The speed of recovery of the costs will be a significant factor in determining the outturn for the second half. Management is confident of achieving its expectations for the full year,' it added.