Packaging and recycling firm DS Smith has reported a 45% year-on-year increase in pretax profit despite a 5% drop in revenue in the first six months of 2014-15.
According to DS Smith, the positive performance was driven by the company’s “dual focus” on product and service innovation and on removing complexity and cost from supply chains across Europe.
The decrease in revenue was pinned on foreign currency exchange and sale of a £23m Scandinavian foams business.
Discounting these reasons, underlying revenues were reported to have increased by 2%.
In the UK, operating profits increased by 66% to £46m while revenue declined by 3%. Corrugated box volumes were described as “broadly flat”.
The financial report said: “The fall in revenues is principally due to lower external revenues from recycling and an improved integration of paper, with revenues from the packaging operations showing modest growth.”
The report said the most notable success in the six months had been the signing of a five-year contract with international food company Mondelez to become sole supplier of their corrugated packaging in Europe.
Group chief executive Miles Roberts said: “We have continued to make good progress with our customers, benefitting from our differentiated commercial offering, and this has translated into strong financial performance, with a particularly good progression on margins and returns as well as excellent cash flow generation. We continue to actively manage our business portfolio and are excited by the opportunities for the group.
“Our outlook remains positive as the business continues to grow, despite ongoing economic headwinds in many of our markets. The board expects continued performance in line with the group’s medium term financial targets.”
Recent acquisitions made by DS Smith include Andopack, a Spanish corrugated packaging business, consultancy The Less Packaging Company Limited and Kaplast, a Croatia-based injection moulding company.
On Wednesday it emerged that DS Smith had declared an interest in buying a majority stake in Kaplamin Ambalaj, a Turkish packaging firm with a turnover or around €160m (£126m).