DS Smith upbeat following French acquisition

6th Sep 2011 07:10

Recycled packaging and office products provider DS Smith said trading since 30 April 2011 has been good after a strong contribution from its French acquisition Otor, a maker of corrugated packaging.Like-for-like volumes in corrugated packaging rose 3% in the last four months, in line with company targets. "This reflects its resilient fast-moving consumer goods customer base and continued progress on margins," it said.DS Smith, which sold its office products divisioin Spicers as part of a shift to focus on packaging, said conversion of profit into operating cashflow has been robust as it continues focus on working capital. Working capital fell in absolute terms, year-on-year, despite both the acquisition of Otor and increased raw material prices raising the value of inventories and debtors, DS Smith added. Its packaging business saw like-for-like revenue growth of 13%, after the group recovered substantial cost increases and saw underlying volume growth."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 €13m."The FTSE 250 group said it had made good progress with the previously announced procurement and UK efficiency savings. These programmes are on track to deliver the expected £6 in total cost savings in 2011/12," it explained. Looking ahead the group said, "Despite the ongoing challenging macro-economic environment and the recent turmoil in global markets, we remain confident in the trading outlook for the year. The Group expects to make further progress towards its previously announced medium term financial objectives in this financial year, in terms of margin improvement, return on capital and cash generation."---CJ