DS Smith reported profits before tax, amortisation and acquisition-related costs of £107m in the six months to 31 October 2012, compared to £65m in the same period last year. Revenue for the Berkshire-based group also jumped by 61.6% to £1.67bn.
The results include a four-month contribution from the €1.6bn (£1.3bn) acquisition of SCA packaging which was completed on 30 June.
Adjusted operating profit from continuing operations rose by 57.3% to £113.2m (2011/12: £78.3m) while return on sales for continuing operations was slightly down from 7.6% in H1 2011/12 to 7.4%. The company blamed this on the poor performance of its paper business coupled with modest margin dilution from SCA packaging.
Exceptional costs of £30.9m were largely attributed to acquisition and integration costs related to SCA Packaging.
Continued weakness in the paper market saw revenues in the group’s UK operations fall by 4.7% in H1 to £490m (2011: £514m) with adjusted operating profit down 34.9% to £26m (2011/12: £39.9m). The company said that expected financial returns in paper had been disappointing, which had adversely affected the UK overall operating result. However it said that the core UK corrugated packaging business had been much stronger.
Although the market remained challenging, the company said that performance of its core UK corrugated packaging businesses remained robust while acquisition synergies were ahead of expectations.
Group chief executive Miles Roberts said the results were pleasing given the challenging economic backdrop and that performance was in line expectations. DS Smith would continue to focus on strengthening its position across its "significantly enlarged, pan-European footprint".
He added: "As expected, markets and the paper cycle in particular, remain challenging. However we believe we are well placed to create further significant value for our investors through the robust performance of our corrugated and plastic packaging businesses, where we continue to see good growth prospects, allied to acquisition synergy benefits that are ahead of our initial expectations.
"We are delivering on our medium term financial targets, and with our strong and consistent cash flow, net debt is set to fall below 2.0x EBITDA by the year end."
