DS Smith raises guidance after H1 revenue advances 28%

By Geoffrey Smith

Investing.com -- Shares in DS Smith (LON:SMDS) opened at a seven-month high, but on Thursday before paring gains, as the U.K. packaging group raised its guidance for the full year and increased its dividend by 25%.

"We now expect FY23 performance to be ahead of previous expectations with H2 being consistent with H1," chief executive Miles Roberts said, even though he acknowledged that "the macroeconomic outlook for the rest of the financial year remains challenging."

Revenue rose 28% in the six months through October to £4.299 billion (£1=$1.2203), with sterling's weakness accounting for just 2 percentage points of that gain. Operating profit and earnings per share were both up by 49% on an adjusted basis. As a result, the company pushed its interim dividend up to 6 pence a share.

Roberts said the company was well-placed to afford higher payouts in what is typically a highly cyclical business. Its position as a supplier to Amazon (NASDAQ:AMZN) and the U.K.'s supermarkets have tended to offer some insulation against that cyclicality in the past.

"We have an excellent customer base, efficient high-quality assets, dedicated colleagues and a strong balance sheet allowing continued organic investment," Roberts said, adding that the company is still seeing good current momentum in its business, not least in southern Europe, where its Europac arm - bought just before the pandemic in 2019 - is now performing strongly.

By 03:30 ET (08:30 GMT), DS Smith stock was up 0.9%, outperforming the benchmark FTSE 100 and FTSE 250 indices, which both drifted slightly lower.