In a trading update released this morning (6 September), the London-headquartered packaging giant said it had seen “strong growth in profits and returns underpinned by excellent customer relationships, continued price recovery and good cost and cash management”.

The company’s corrugated box volumes declined slightly in its Q1 period on a like-for-like basis, as expected, and against growth in the comparative quarter of 13%; it continues to expect growth of at least 2% for the full year.

Virtually all of its input costs, including energy, have increased significantly, the business said, although its energy cost increases have been “substantially mitigated” by efficiency initiatives and its long-term hedging programme.

Currently more than 90% of its natural gas costs are hedged for FY23 and around 80% for FY24, with costs being recovered through increased packaging pricing.

Long-term supplier relationships and other cost management programmes are ongoing to mitigate inflation, the business added.

The company’s outlook for FY23 remains unchanged, with an expectation of a significant improvement in performance.

Miles Roberts, DS Smith group chief executive, said: “We have started the financial year very strongly, despite the current macro-economic conditions.

“We are focusing on ensuring the highest levels of security of supply and customer service and are very pleased with the ongoing support we receive from both our customer and supplier base.

“Whilst the industrial sector is showing some weakness, our FMCG business remains resilient.”

He added: “The increased profitability and cash generation is being driven by improving efficiency and cost increase mitigation as well as successfully continuing to raise packaging prices. Overall returns on capital remain within our medium-term target.

“As we enter the second quarter, we are very mindful of the challenging economic environment in which we operate and the impact it has on both our customers and colleagues. However, our operating plans and progress to date continue to give us confidence in our outlook for FY23.”

Separately, DS Smith also said today that Adrian Marsh has informed the company of his intention to retire from the board and from his role as group finance director once a successor is in place.

A process will be undertaken by the business to identify and appoint his successor and a further announcement regarding the date of Marsh’s retirement will be made in due course.

Roberts commented: “Adrian Marsh joined the board in September 2013 and has been a very valued colleague, making a major contribution to the growth and success of the company over the past decade.

“On behalf of the board and the company, I would like to thank Adrian for all that he has contributed to the DS Smith Group. He will retire with our very best wishes.”

Marsh added: “I have been very proud to work for DS Smith over a really exciting period of the company's development. I would particularly like to thank Miles, the board and all my colleagues for their support and look forward to continuing to work with them ahead of my retirement.”

Marsh had initially been set to leave DS Smith in 2020 in his then role of chief financial officer to take on the same role at William Hill but he later informed the company’s board that he would not be moving over to the bookmaker “given the current unprecedented circumstances [the first UK Covid lockdown had just started]”.

DS Smith’s share price had climbed by 3.2% at the time of writing just before midday to 271.5p (52-week high: 465.97p, low: 258.2p).