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Takeover drives profit for DS Smith

Half year results from DS Smith have showing a 52% leap in pre-tax profit to £85m driven by the absorption of SCA Packaging, which it took over last year.

Revenue was up in the six months to October 2013 by 25% to £2.1bn and market share increased by 2.2%, led mainly by Germany and central and eastern Europe.

Group chief executive Miles Roberts said: “We are encouraged by the strong results announced today and the continued delivery of our strategy from our sustainable business model.

“The good volume growth reflects market share gains from a strengthened customer proposition, driven by innovation and removing complexity and cost from our customers’ supply chain.”

He added that he expected “further good progress over the remainder of the year, despite ongoing challenging market conditions, and the board views the future with confidence”.

The results statement noted that the whole half year included ownership of SCA, whereas it had featured for only four months of the preceding period.

Increased revenue and operating profit from this acquisition were seen most strongly in Germany, Austria, Switzerland and northern Europe, where DS Smith previously had relatively little presence, and in western and central Europe and Italy where the SCA purchase had “materially expanded our presence in these regions”.

UK sales fell by 1.9% to £480.8m, but operating profit improved by 9.5% to £27.7m. Corrugated box volumes were positive “despite a challenging market for corrugated products and have shown an improving trend towards the end of the half-year period”, the company said.

It attributed the fall in revenues to the disposal of two sites required as part of its purchase of SCA as well as to tough economic and trading conditions.

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