DS Smith aims to tap growing demand for recyclable boxes

(Reuters) - British cardboard maker DS Smith expects to flourish from a sustained boom in online shopping and growing demand for recyclable packaging, it said on Tuesday as it reported a second-half recovery from an initial pandemic-induced slump.

An employee transports a giant reel of paper inside the carboard box manufacturing company DS Smith Packaging Atlantique in La Chevroliere near Nantes, France, April 25, 2019. REUTERS/Stephane Mahe/File Photo

DS Smith, which supplies packaging products to companies including Amazon, Nestle, and Unilever, said adjusted operating profit in the second half of its financial year rose by more than 18% from the first half, citing rising demand, particularly in the United States.

The company expects the online shopping boom to continue even after COVID-19 lockdowns end, saying that consumers now prefer the choice and convenience it offers, and plans to tap continued growth in demand for sustainable products.

As Europe’s biggest recycler of cardboard, the London-based company has committed to manufacturing 100% recyclable packaging by 2023, it said.

With consumers more conscious of the need to recycle packaging and the importance of alternatives to plastics, it has also upped its investment to set up box plants in Italy and Poland.

“It is our highest growth rate ever achieved. We are pleased with that growth in the COVID era,” Chief Executive Miles Roberts, said of the company’s second-half box output.

Pretax profit for the full year to April 30 fell 38% to 231 million pounds, with the pandemic hitting operations hard in the first half.

Shares in the company were down 1.8% at 424 pence at 0956 GMT.

For the current year, the company said it expects higher packaging prices to offset increasing energy, transport and labour costs.

DS Smith also announced a final dividend of 8.1 pence, taking its total dividend for the year to 12.1 pence.

($1 = 0.7193 pounds)

Reporting by Vishwadha Chander in Bengaluru; Editing by Sherry Jacob-Phillips and David Goodman