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DS Smith has reported a revenue of £3.37bn ($4.2bn) for the first half (H1) of the 2024-25 financial year, a 4% decline on a reported basis from the £3.51bn reported in the same period last year.
The decrease reflects lower selling prices despite a growth in box volumes by 2%.
DS Smith's group return on sales declined to 6.6% from 10.4% in the first half of the previous financial year, falling short of the medium-term target of 10%-12%. This decrease was due to reduced profitability despite increased packaging volumes.
Meanwhile, DS Smith and International Paper shareholders have voted in favour of the all-share offer from International Paper to combine the businesses, with completion expected in the first quarter of 2025.
Basic earnings per share from continuing operations plummeted by 79% to 3.1p, influenced by lower profitability and adjusting items, mainly related to the offer from International Paper.
An interim dividend of 6.2p per share has been declared. Adjusted basic earnings per share also declined by 52% on a constant currency basis to 8.3p.
Adjusted operating profit stood at £221m, down from £365m in the same period last year, aligning with the company's expectations amidst ongoing market challenges. The company also reported £75m in transaction costs related to the International Paper deal in its statutory profits.
Net debt increased slightly to £2.47bn as of 31 October 2024, from £2.23bn reported as of 30 April 2024. The net debt/earnings before interest, taxes, depreciation, and amortisation ratio stands at 2.8 times, above the medium-term target of at or below two times but well below the primary covenant requirement of 3.75 times.
DS Smith's investment in the business aims to drive future returns and further efficiencies, with net capital expenditure rising by 15% in the first half of the year to £239m.
The North America and Eastern Europe regions exhibited the fastest volume growth while Northern and Southern Europe remained consistent with the previous year, reflecting subdued market demand overall.
DS Smith group chief executive Miles Roberts said: “We have delivered a solid performance, with profitability in line with our expectations, despite a continued challenging market environment.
"We have maintained our relentless focus on customer service, product quality and innovation, together with significant cost and productivity initiatives, to mitigate the impact of a softer-than-expected overall market."
"Looking forward, whilst recognising the recent paper price weakness, we continue to expect modest growth in packaging volumes and increasing sequential prices to recover higher input costs."