DS Smith share price recovery faces key hurdle as challenges rise

DS Smith (LON: SMDS) share price slipped for two straight days as the British company battles weaker demand in its key markets. The stock, which peaked at 309.50p on Thursday, retreated to 301.3p on Monday. It has fallen by more than 15% from its highest point this year.

Falling demand, CEO resignation

DS Smith is a British company that provides packaging solutions, paper products, recycling solutions, and point of sale display solutions. The company has grown in the past few years mostly through acquisitions. 

DS Smith’s business boomed during the pandemic as demand for e-commerce solutions rose. Recently, however, demand has dropped, leading to a sharp decline in its revenue and profitability.

The most recent results revealed that the company’s revenue crashed by 18% in the first half of the year to £3.51 billion. This retreat led to a 15% decline in profit before tax to £268 million. Its adjusted operating profit dropped by 18% to £365 million.

The company believes that the market will be challenging for a while because of the slowing British economy. This macro situation has led to a 4.7% drop of box volumes, mostly in the UK and Germany. 

Its cash flow statement was also not encouraging. Free cash flow came in at minus £54 million compared to £494 million in the same period in 2022.

Therefore, DS Group and its stock will remain under pressure in the coming months as the economy slows. Economic data published this month showed that the manufacturing and services PMIs in key European countries remained below 50 in November, a sign that the industry is contracting. 

Business confidence is also falling. In the UK, confidence among business leaders remained at the lowest level this year. This partly explains why higher-than-usual leaders of FTSE 100 companies are quitting. DS Group’s CEO, Miles Roberts, announced that he would quit in December 2025.

DS Smith share price analysis

SMDS chart by TradingView

The daily chart shows that the DS Smith stock price found substantial resistance at 309.50p since June this year. It has failed to move above this price several times since then. The stock remains above the 25-day and 50-day Exponential Moving Averages (EMA).

A closer look shows that the stock is forming an inverse head and shoulders pattern, which is usually one of the bullish signs. The head of this pattern is at 260p. Therefore, a bullish breakout will be confirmed if the price moves above the upper side of the inverse H&S pattern at 309.5p.