UPDATE 1-Recycled packaging maker DS Smith's profit rises 52 pct

Thu Dec 5, 2013 4:31am EST

* Says first-half pretax profit rose 52 pct to 85 mln stg

* Says first-half revenue rose 25 pct to 2.08 bln stg

* Expects full-year results to gain from increase in product prices

* Shares up more than 5 pct at 314.5 pence (Adds CEO, analysts' comments; updates stock movement)

Dec 5 (Reuters) - British recycled packaging provider DS Smith reported a 52 percent rise in first-half profit as it gained market share and benefited from the acquisition of Swedish rival SCA Packaging last year.

Pretax profit rose to 85 million pounds ($139 million) in the six months ended Oct. 31 from 55.8 million pounds a year earlier. Revenue rose about 25 percent to 2.08 billion pounds.

Shares in the company, whose customers include Proctor & Gamble Co, Nestle SA, and Unilever Plc , rose more than 5 percent to 314.5 pence on the London Stock Exchange.

The stock, which has gained about 51 percent since the beginning of the year, was among the top gainers on the FTSE-250 Midcap Index on Thursday.

DS Smith said market share gains have spurred volume growth in corrugated packaging, particularly in Germany and Central and Eastern Europe.

"Germany is exceeding the 5 percent growth target outlined at the (company's) September capital markets day, with Central and Eastern Europe tracking slightly below its medium-term target of 8 percent," UBS analysts Catriona O'Grady and David Hallden wrote in a note to clients.

They added that the company was able to improve margins by 40 basis points to 7.7 percent despite several increases in the price of paper during the first half.

Chief executive Miles Robert told Reuters that the company had raised its prices to offset the 15 to 20 percent rise in paper prices since the beginning of the year.

He added that the company would benefit from the higher prices in the second half and expected full-year results to be in line with market estimates.

The company said the market was expecting a pretax profit of 256.6 million pounds and sales of 4.07 billion pounds for the year ending April 30.

"On a 12 month basis, we continue to see upside potential for its shares, driven by ongoing synergies, an improving trading environment and consolidation opportunities," Citi analysts wrote in a note to clients.

DS Smith also raised its interim dividend to 3.2 pence per share from 2.5 pence.

($1 = 0.6119 British pounds) (Reporting by Tasim Zahid and Esha Vaish in Bangalore; Editing by Supriya Kurane)

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