DS Smith reports a 5% increase in annual operating profit as COVID-19 fuels online shopping

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on Jul 2, 2020
  • DS Smith reports a 5% increase in annual operating profit as COVID-19 fuels online shopping.
  • The FTSE 100 listed company says its revenue declined by 2% on a year over year basis.
  • The London-based firm refrained from resuming dividend payments in the short-term.

DS Smith (LON: SMDS) revealed a 5% increase in its full-year profit on Thursday. The company attributed the increase to a higher demand for its boxes as the Coronavirus pandemic fuelled online shopping in recent months. DS Smith recently announced Rogier Gerritsen as the new managing director of its recycling division.

Shares of the company opened more than 10% down on Thursday. At 295 pence per share, DS Smith is a little under 25% down year to date in the stock market after recovering from a low of 255 pence per share in the first week of April. At the time of writing, it is valued at 4.03 billion and has a price to earnings ratio of 12.78.

DS Smith posts a 2% year over year decline in revenue

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The British cardboard maker said that its adjusted annual operating profit came in at £660 million as compared to a lower £631 million in the previous year. DS Smith had resorted to suspending dividends to shore up finances amidst COVID-19 that has so far infected more than 300,000 people and caused a little under 44,000 deaths in the United Kingdom. Citing the virus-related uncertainty, the company refrained from resuming dividend payments in the short-term.

In terms of revenue, DS Smith recorded £6.04 billion that represents a 2% year over year decline. The FTSE 100 listed company registered a robust performance in Europe this year. It offloaded its plastics division and bought Spain’s Europac for £1.71 billion.

In the past two months, DS Smith added, the health crisis resulted in a £15 million hit to its profit ascribed to weaker activity in the industrial sector and lean box volumes. The London-based company has a workforce of 28,500 employees with operations in 37 countries. It is a supplier for prominent names like Amazon, Unilever, and Nestle.

CEO Miles Roberts remarks on Thursday

CEO Miles Roberts commented on the company’s report on Thursday and remarked:

“In the medium-term, the growth drivers of e-commerce and sustainability are as strong as ever. The COVID-19 crisis is also expected to accelerate a number of the structural drivers for corrugated packaging and our scale and innovation-led customer offering positions us well and gives us confidence for the future.”

In the earlier months of 2020 when the pandemic struck, the international packaging business reported an increase in supplies like frozen foods, drinks, ambient food, hygiene, and dry packaged grocery as customers stockpiled ahead of the lockdown. Higher demand for essential items also delivered a boost to the e-commerce sector in recent months.

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