Coronavirus Update

DS Smith PLC 2020/2021 Full Year Results

This content has been sourced from:

12 months to 30 April 2021

Continuing operations





(constant currency)





Adjusted operating profit(1)




Profit before tax




Adjusted basic EPS(1)




Statutory basic EPS




Dividend per share




Return on sales(2)








See notes to financial table below



Financial highlights

· Accelerating corrugated box volume growth

· FY +3.5%, H2 +8.2%

· Further market share gains with FMCG customers in Europe and US

· Trading continues to build positively

· Profit adversely impacted by Covid-19, particularly in Q1

· Positive profit momentum: H2 adjusted operating profit £272m vs. H1 £230m

· Good progress with initial price recovery of input cost increases

· Strong recovery from US business - adjusted operating profit up 70%

· Excellent cashflow generation

· FCF(8) +37% driving net debt reduction to £1,795m 2.2x net debt/EBITDA (31 October 2020 2.4x)

· Statutory profit before tax for year £231m (-38%)


Strategic highlights

· Delivery through Covid-19

· All sites operational throughout the period

· High levels of service providing security of supply for customers

· Continued leadership in Circular Economy and sustainability

· CO2 emissions reduction of 23% since 2015

· Commitment to science-based carbon targets and net zero by 2050

· Well positioned for growth

· Structural trends of e-commerce and sustainability accelerated by Covid-19

· Fully fibre-based, innovative packaging for consumer goods

· Continuing investment in R&D, packaging capacity, innovation and digital platforms

· New financial year started well



Through clear and consistent strategic direction we have positioned our business as a solely fibre-based Group, centred on innovation and sustainability with the scale and expertise to deliver for multinational consumer companies predominantly in the fast moving consumer goods (FMCG) and e-commerce sectors.


The start of the 2020/21 financial year coincided with the initial impacts of Covid-19 being felt across many parts of the business. This manifested in an initial fall in our packaging volumes and significant volatility in the cost of various raw materials. In response we invested in safeguarding the health and safety of our colleagues, and in the security and operational effectiveness of all our sites. This was in addition to carrying additional costs from production underutilisation. The effect of the above was a significant fall in profitability during the first quarter of the year.


With all our sites fully operational and the maintenance of high levels of customer service, we started to see a good gain in market share with increasingly positive volume growth, primarily in the FMCG/e-commerce sectors, during the second quarter of the year. This was combined with a lessening in the volatility of input costs. The second quarter of the year therefore showed a significant improvement in the run-rate of profitability over the first quarter, albeit at a lower level than the comparative period last year.


Encouragingly, the momentum in packaging volumes seen in the second quarter has continued to build throughout the remainder of the financial year resulting in second half growth of 8.2 per cent, against the previous comparative period, which compares to -1.0 per cent in the first half.


The strong demand for packaging was accompanied by an increase in input costs, particularly in the fourth quarter of the financial year. Given the strong demand, and good levels of customer service, these costs are starting to be recovered with good initial progress.


Overall profitability in H2 therefore showed a strong improvement over the first half and significantly closed the underperformance with the comparative period last year. Our US operations have performed very well, particularly in H2, with profit for the year up 70 per cent (on a constant currency basis) compared to the prior year, and H2 63 per cent ahead of H1, reflecting strong corrugated box volumes overall and improved paper and packaging market pricing in the second half.


During the year we continued to invest in our business to capitalise on the accelerated growth trends of e-commerce and sustainability and the strong pipeline of opportunities ahead. This included the announcement of two new state-of-the-art packaging plants in Italy and Poland, increased investment in digital platforms and innovation of new products.




The continued investment in our business, together with the strong support of our customers and the momentum built over recent quarters, give us confidence for the current year and future. Whilst the business has seen reduced profitability over the last twelve months, we firmly believe that we exit 2020/21 stronger, further focused on the accelerated opportunities a post-Covid-19 world offers and that our customers will continue to recognise this going forward.


The current year has started well, with the volume momentum of the final quarter of FY21 continuing into this year. Inflationary cost pressures have also continued, in particular old corrugated cases (OCC), but also other costs such as energy, transport and labour. Packaging prices have started to increase and we expect to fully recover these increasing costs.


Accordingly, while there remains uncertainty in the overall economic environment, demand is strong and we expect to make good progress this year.


Miles Roberts, Group Chief Executive, commented:

"Above all else I would like to recognise the extraordinary commitment of all our 29,000 colleagues over the last 12 months. Our teams in over 300 sites have gone above and beyond what is required to keep delivering for our customers, supporting all our communities and, most of all, taking care of each other. We invested heavily to keep all of our people safe and all of factories open throughout the pandemic and this enabled us to build good momentum through the year after a challenging Q1.


The growth drivers of e-commerce sustainability and plastic-free packaging have accelerated over the last twelve months and we are very well placed to capitalise on this growth. We have worked hard over many years to focus our business purely on fibre-based packaging and this differentiation is clearly recognised by our customers."


Delivery against our medium-term targets

Medium-term targets

Continuing operations

Delivery in 2020/21

Organic volume growth(4) at least GDP(5)+1% (-5.5%)


Return on sales(2) 10% - 12%


ROACE(3) 12% - 15%


Net Debt / EBITDA(6) ≤2.0x


Operating cash flow/operating profit(7) ≥ 100%


See notes to the financial here: