DS Smith (SMDS) H2 2024 earnings summary

Executive summary

• Revenue declined 17% year-over-year to £6,822m, with adjusted operating profit down 19% to £701m amid weak demand and lower paper prices.

• Resilient performance achieved through cost mitigation, efficiency gains, and strong customer relationships, especially in FMCG.

• Board recommended an all-share combination with International Paper, aiming to create a global packaging leader.

• Sustainability targets exceeded, including replacing over 1.2bn plastic units and a 19% GHG emissions reduction since 2019.

• Dividend maintained at 18.0p per share, reflecting confidence in future performance.

Financial highlights

• Revenue: £6,822m, down 17% year-over-year (constant currency -16%).

• Adjusted operating profit: £701m, down 19% year-over-year.

• Profit before tax: £503m, down 24% year-over-year.

• Adjusted EPS: 33.1p, down from 43.0p.

• Net debt/EBITDA: 2.1x, up from 1.3x.

• Free cash flow: outflow of £175m, impacted by one-off items and working capital outflow.

• Return on sales: 10.3% (2023: 10.5%).

• ROACE: 10.7% (2023: 14.3%).

Outlook and guidance

• Positive volume trends from H2 FY24 continue into FY25, with expected packaging price rises to offset higher input costs.

• Benefits of price increases anticipated to be weighted to H2 FY25 and provide momentum into FY26.

• Focus remains on pricing, operational efficiency, and tight cost control.