The Group, owners of Severnside Recycling and St Regis, has suffered the impact of low demand for its products and services due to the recession, which worsened as the year went on. The firm made just £16.8 million against £109.1 million in the previous year, losing 84.6 per cent in pre-tax profits.
The net deficit on its defined pensions schemes also increased this year by £83.5 million to £138 million. Plans regarding the scheme are currently under review.
DS Smith chairman Peter Johnson said: All our activities were affected by the global recession and its impact on the demand for our products. To underpin our financial strength, we have undertaken a programme of actions to reduce costs and improve cash generation. As part of this, the Board is recommending a reduced final dividend of 1.8 pence. The programme will reinforce the Groups financial position through the downturn and enable DS Smith to emerge stronger as the market recovers.
Caused by a fall in demand, the declining waste paper price, the Groups key raw material, was heavily reflected in the Groups UK Paper and Corrugated Packaging Operations profits.
The firms plans, launched in December with a £27m restructuring fund, focus on cost reduction and cash generation. It is hoped this will restructure activities to improve performance in those products that are lacking, and optimise performance in strong areas of the business. The firm has spent £18.2m restructuring the UK Paper and Corrugated Packaging, which includes the cost of redundancies.
DS Smith group chief executive Tony Thorne said: Economic indicators continue to show a global economy in recession. The timing of any recovery remains uncertain . Although it is early in our financial year, trading is in line with our expectations. Our consistent strategy to build leadership positions is standing us in good stead in the downturn, and we are confident that this, combined with the continued implementation of our action programme, will underpin our results. We expect to benefit strongly from the upturn when it arrives.