21 June 2022
DS SMITH PLC – 2021/22 FULL YEAR RESULTS
CONTINUING MOMENTUM
|
12 months to 30 April 2022 Continuing operations |
Change (reported) |
Change (constant currency) |
|
|
Revenue |
£7,241m |
+21% |
+26% |
|
Adjusted operating profit(1) |
£616m |
+23% |
+29% |
|
Profit before tax |
£378m |
+64% |
+71% |
|
Adjusted basic EPS(1) |
30.7p |
+27% |
+35% |
|
Statutory basic EPS |
20.4p |
+53% |
+61% |
|
Dividend per share |
15.0p |
+24% |
NA |
|
Return on sales (RoS)(2) |
8.5% |
+10bps |
+10bps |
|
ROACE(3) |
10.8% |
+260bps |
+260bps |
See notes to financial table below
Miles Roberts, Group Chief Executive, commented:
“It has been another year of volatile trading conditions where we have worked through the tail-end of the pandemic and, more recently, the tragic events of the Russian invasion of Ukraine. These difficult periods have again brought the best out of all of our colleagues at DS Smith, demonstrating their resilience, compassion and commitment.
We have delivered strong operational, environmental and financial results. The actions we have taken, driven by our strategic focus on our customers and their changing needs, including an ever-increasing focus on sustainability, have resulted in record volume growth. This, together with price increases which have offset significant cost inflation, has driven a strong improvement in profitability and high cash generation. We continued to recycle capital out of mature, non-core assets with the disposal of the De Hoop paper mill, whilst reinvesting in new packaging sites that meet customer demand and offer attractive financial returns.
The new financial year has started well, building on the momentum from the previous year. Whilst there remains considerable uncertainty about the overall economic environment, our expectations remain unchanged. Strong customer demand reinforces our confidence to invest in the business, with capital expenditure expected to further increase in the current year. We currently expect to see 2-4 per cent growth in our volumes, aided by our focus on resilient end markets, a strong performance in the US and the opening of new sites in regions where demand is buoyant. This growth, combined with the benefits of ongoing pricing momentum and careful management of our cost base gives us confidence for the year ahead and is expected to result in a further substantial improvement in our performance.”
Strong financial performance
- Record like-for-like corrugated box volume growth of +5.4%(4)vs FY 2020/21
- Adjusted operating profit of £616m up 29%
- Positive profit momentum through the period: H2 EBITA £340m (H1 £276m)
- Price recovery successfully offsetting increased input costs
- Strong operational and financial performance from Europac (12% ROACE in FY21/22)
- Continued US progress with EBITA growth of +31% and RoS 13.4%
- ROACE +260bps to 10.8% (H2 12.1%)
- Return on Sales +10bps to 8.5% (H2 8.8%)
- Strong cash flow generation driving leverage reduction
- FCF(8)£519m (+7%)
- Net debt reduction to £1,484m; 1.6x net debt/EBITDA(6)(2.2x at 30 April 21)
- Statutory profit before tax for year £378m (+71%)
Good strategic and operational progress
- Supporting our customers in a challenging environment
- Excellent service levels and security of supply
- Investment in growth projects on track with new greenfield site in Italy now operational and Poland currently being commissioned
- 80% pre-sold and expected 15-20% ROACE in year 3
- Demand from resilient FMCG focussed customer base supports continued disciplined capital investment for growth
Leading in Sustainability
- Working with our customers to deliver their sustainability goals
- Circular design metrics gaining traction with 2,000 live projects
- 313m units of plastic replaced since 2020
- Industry leading CO2reduction targets
- Science Based Targets initiative approved plan in line with 5°Ctrajectory
- Commitment to Net Zero carbon emissions by 2050
- 29% reduction in CO2per tonne of production vs 2015
- 100 biodiversity projects launched in the year
- Achieved target for producing 100% reusable or recyclable packaging
Positive outlook
- Despite a more challenging backdrop, the structural growth drivers together with a resilient FMCG customer base and our compelling offering underpin our confidence for FY22/23:
- Corrugated box volume growth currently expected to be 2-4%
- Capital expenditure increased to approximately £500 million to invest in customer led growth opportunities, including sustainability, at attractive financial returns
- Continued price recovery and cost management offsetting inflationary costs
- Good early momentum in the current financial year 2022/23