DS Smith says its pre-tax profit slid 54% in the fiscal first half

DS Smith plc (LON: SMDS) said on Thursday that demand for packaging material recovered quickly in the fiscal second quarter as the ongoing Coronavirus pandemic fuelled online shopping in recent months. The company also expressed confidence that it was now time to resume dividend payments.

DS Smith jumped more than 2% on market open on Thursday but lost the entire intraday gain in the next hour. On a year-to-date basis, its stock, that you can learn to buy online here, is now close to 7% down.

DS Smith declares 4 pence per share of interim dividend

The FMCG (fast-moving consumer goods) sector, including e-commerce, makes up roughly 83% of the total business volumes for DS Smith. The company’s board declared 4 pence per share of interim dividend on Thursday after months of halt to cushion the economic blow from the COVID-19 crisis. CEO Miles Roberts said:

“We have maintained our track record of winning market share through our fibre-based offering focussed on FMCG and e-commerce customers, where the seasonal period has seen solid growth.”

In November, the packaging company added, box volumes climbed by 5% on an annualised basis. DS Smith has prominent names, including Nestle, Amazon, and Unilever on the list of its clients. The British multinational now intends to establish its packaging plants in Poland and Italy to address the rising demand in the future.

DS Smith reports £2.8 billion of revenue in fiscal H1

For the fiscal first half at large, however, DS Smith reported £97 million of pre-tax profit that represents a 54% year over year decline on the back of weaker demand industrial demand, especially in the first quarter, and lower prices. In an announcement last week, DS Smith said it will launch virus-resistant packaging in the near future.

In terms of revenue, the London-based company reported £2.8 billion in the six months that concluded on 31^st October, representing a 9% annualised decline. Volumes were down 1% in H1. In separate news from the UK, online supermarket Ocado Group plc said its retail revenue climbed to £579.6 million in the fiscal fourth quarter.

As of the end of the first half, DS Smith valued its net debt at £2 billion versus a higher £2.1 billion in April. At the time of writing, the FTSE 100 listed company is valued at £4.98 billion and has a price to earnings ratio of 17.25.