United Kingdom-based recycled-content paperboard producer DS Smith says demand for its products has been strong, but rising prices for the old corrugated containers (OCC) it buys is prompting it to charge more for its product line.
“Input costs have continued to rise, with notable increases in the cost of energy and transportation,” says Miles Roberts, DS Smith group chief executive. “Combined with the cost of OCC remaining high, this has resulted in further significant increases in the price of paper.”
Roberts also points to DS Smith’s operations in the United States as one of the bright spots for the firm. “Driven by our differentiated sustainable packaging offer, box volumes have grown very strongly versus the comparable prior-year period and also compared to the comparable period in 2019,” he comments.
Roberts adds, “Whilst this growth has been across all parts of the group it has been especially strong in the U.S. and Southern Europe and with our large FMCG [fast-moving consumer goods] multinational customers.
“I am very pleased with the progress made during the financial year to date,” Roberts says of the period starting May 1. “We have continued to build on our strong customer relationships, resulting in excellent volume growth and good progress towards recovering the significant increasing costs of production through higher prices.”
He continues, “Trading continues to progress well, in line with the trends and momentum described in our full year results on June 22, 2021. Industrial customers have also seen significant increases in demand, but this represents a relatively small proportion of our overall customer portfolio given our development in the resilient and growing FMCG customer base.”
Looking ahead, Roberts comments, “Construction of the additional packaging manufacturing sites in Italy and Poland is proceeding to plan and they are expected to begin operations in Q4 this financial year. Both plants have already received advanced commitments from customers for over 50 percent of their capacity. Our investment plans continue to prioritize meeting the growth of our packaging customers both for the near and medium-term.”