Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to MrFahrenheit,SalvorHardin,Anonymous,johnhemming,Anonymous, for Donating to support the site

Smith (DS) Finals.

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
Forum rules
Tight HYP discussions only please - OT please discuss in strategies
idpickering
Lemon Half
Posts: 5898
Joined: November 4th, 2016, 5:04 pm
Has thanked: 1037 times
Been thanked: 2158 times

Smith (DS) Finals.

#323160

Postby idpickering » July 2nd, 2020, 7:09 am

• Strong financial performance and position, growing market share

• Strong European performance

• US domestic performance offset by continued weak export paper pricing

• Successful integration of Europac and disposal of Plastics division

• Covid-19:

◦ Relatively limited Covid-19 impact in March and April, FY 2019/20

◦ Short-term impact due to lower volumes and cost increases in FY 2020/21

• Strong ESG performance

• Well positioned for the future, despite economic uncertainty

Miles Roberts, Group Chief Executive, commented:

" We have made good strategic and financial progress in the year, with the disposal of our Plastics division reinforcing our focus on sustainable fibre-based packaging and our strong commercial focus driving record margin. Of course, the year ended with the onset of the Covid-19 pandemic and I am extremely proud of our employees and their tremendous support, working with our suppliers and communities to ensure every factory has remained open throughout the pandemic, delivering essential supplies with outstanding levels of service in this extraordinary time .

Our business model is resilient, built on our consistent FMCG and e-commerce customer base. In the short term, however, the impact of Covid-19 on the economies in which we operate is likely to impact volumes to industrial customers and add to operating costs. In particular, infrastructure constraints have driven elevated OCC prices, although we currently expect the impact to be limited to H1. With the current economic uncertainty, we continue to focus on our employees, our customers, our communities and on the efficiency and cash generation of our business and accordingly the Board considers it premature to resume dividend payments at this stage.

In the medium-term, the growth drivers of e-commerce and sustainability are as strong as ever. The Covid-19 crisis is also expected to accelerate a number of the structural drivers for corrugated packaging and our scale and innovation led customer offering positions us well and gives us confidence for the future."


And later on dividends;

Dividend

The Board considers the dividend to be a very important component of shareholder returns. On 8 April 2020, in light of the unprecedented uncertainty due to the Covid-19 pandemic, we announced that the Board had decided that it was prudent to not pay the interim dividend due for payment on 1 May 2020, despite our strong liquidity profile and resilient trading to that date. The Board has since considered the overall dividend payment for this financial year and, taking into consideration the interests of all stakeholders, concluded that the outlook remains too uncertain to commit to a resumption of dividend payments in the short term. Recognising the importance of dividends to all shareholders, the Board will actively consider the resumption of dividend payment, when we have greater clarity over outlook.


https://www.investegate.co.uk/smith--ds ... 00037809R/

I hold these in my HYP, and although I understand the company's position, the lack of dividend payment is still nonetheless disappointing.

Ian.

Itsallaguess
Lemon Half
Posts: 5398
Joined: November 4th, 2016, 1:16 pm
Has thanked: 2169 times
Been thanked: 3971 times

Re: Smith (DS) Finals.

#323162

Postby Itsallaguess » July 2nd, 2020, 7:15 am

Higher input prices of used cardboard, lower volumes to industrial customers, and higher COVID-related operating costs -

Outlook -

Our business model is resilient, built on our consistent FMCG and e-commerce customer base. In the short term, however, the impact of Covid-19 on the economies in which we operate is likely to impact volumes to industrial customers and add to operating costs. In particular, infrastructure constraints have driven elevated OCC prices, although we expect the impact to be limited to H1. With the current economic uncertainty, we continue to focus on our employees, our customers, our communities and on the efficiency and cash generation of our business and stopping unessential expenditure.

In the medium-term, the growth drivers of e-commerce and sustainability are as strong as ever. The Covid-19 crisis is also expected to accelerate a number of the structural drivers for corrugated packaging and our scale and innovation led customer offering positions us well and gives us confidence for the future.


Cheers,

Itsallaguess

Arborbridge
Lemon Quarter
Posts: 4969
Joined: November 4th, 2016, 9:33 am
Has thanked: 1120 times
Been thanked: 1789 times

Re: Smith (DS) Finals.

#323184

Postby Arborbridge » July 2nd, 2020, 9:02 am

Over 8% down now. DSSmith is one of those I wouldn't mind buying for its potential dividend, rather than for any logically argued HYP case. Yes, why buy a non-payer when there are payers? Well, I can't occasionally resist an off-the wall buy as a speculation in the hope of laying down something for the future.

Not that I have any cash for the moment!

Arb.

idpickering
Lemon Half
Posts: 5898
Joined: November 4th, 2016, 5:04 pm
Has thanked: 1037 times
Been thanked: 2158 times

Re: Smith (DS) Finals.

#323190

Postby idpickering » July 2nd, 2020, 9:22 am

Arborbridge wrote:Over 8% down now. DSSmith is one of those I wouldn't mind buying for its potential dividend, rather than for any logically argued HYP case. Yes, why buy a non-payer when there are payers? Well, I can't occasionally resist an off-the wall buy as a speculation in the hope of laying down something for the future.

Not that I have any cash for the moment!

Arb.


Agreed Arb. I have mentioned buying more TW. and BA. recently, and they’re both dividend bad boys. I like a bargain, for a long term hold, and the hope of things returning to normal with regards to dividend payments in the future. As for SMDS, I’m happy to hang in there, but am not buying more currently.

Ian.

ReallyVeryFoolish
Lemon Slice
Posts: 799
Joined: October 5th, 2019, 12:06 pm
Has thanked: 576 times
Been thanked: 361 times

Re: Smith (DS) Finals.

#323193

Postby ReallyVeryFoolish » July 2nd, 2020, 9:30 am

Deep disapointment at this outcome here from what I thought was a very well run 21st century facing business. With parcels being in huge demand (packaging = DS Smith) I have equally huge dismay. Clearly, I am not my own this morning either. Bad result.

:cry:

RVF

Arborbridge
Lemon Quarter
Posts: 4969
Joined: November 4th, 2016, 9:33 am
Has thanked: 1120 times
Been thanked: 1789 times

Re: Smith (DS) Finals.

#323208

Postby Arborbridge » July 2nd, 2020, 10:19 am

ReallyVeryFoolish wrote:Deep disapointment at this outcome here from what I thought was a very well run 21st century facing business. With parcels being in huge demand (packaging = DS Smith) I have equally huge dismay. Clearly, I am not my own this morning either. Bad result.

:cry:

RVF


Sure is a bad result - I had expected better for this next outlook period.
However, one hopes they are just erring on the cautious side until we know about seond spikes etc. That might resonate with your thought that they are well run. ...or it could mean they are a busted flush in despair :?

Arb.

idpickering
Lemon Half
Posts: 5898
Joined: November 4th, 2016, 5:04 pm
Has thanked: 1037 times
Been thanked: 2158 times

Re: Smith (DS) Finals.

#323212

Postby idpickering » July 2nd, 2020, 10:39 am

Arborbridge wrote:
ReallyVeryFoolish wrote:Deep disapointment at this outcome here from what I thought was a very well run 21st century facing business. With parcels being in huge demand (packaging = DS Smith) I have equally huge dismay. Clearly, I am not my own this morning either. Bad result.

:cry:

RVF


Sure is a bad result - I had expected better for this next outlook period.
However, one hopes they are just erring on the cautious side until we know about seond spikes etc. That might resonate with your thought that they are well run. ...or it could mean they are a busted flush in despair :?

Arb.

Imho, and I’m not an expert, I think the weak sp is over done. I think it’s just management trying to do their job in difficult circumstances. Either way, this won’t budge me from being a HYPer with SMDS in my HYP. Furthermore, they’re 1 of 25 holdings in my HYP. It’s because of the movements with regards to SMDS sp and such like, that we diversify in the first place,
Don’t panic, and think longer term than just today.

Ian,

Dod101
Lemon Half
Posts: 6074
Joined: October 10th, 2017, 11:33 am
Has thanked: 1367 times
Been thanked: 2426 times

Re: Smith (DS) Finals.

#323221

Postby Dod101 » July 2nd, 2020, 11:04 am

I suspect Ian is right. I do not hold Smith but I am not expecting anything from my two cancelations (HSBC and Gleeson) nor anything more from my cutters (Shell, Imperial Brands and Admiral) although I would not be surprised if Admiral reinstated their Special at the half year.

After all it is only three months or so since most of those cuts were made and things are I imagine going pretty much as expected. I think towards the year end is more likely timing if at all this year. I would not expect any real reinstatements until the year end results announcements early next year but it would be great if they came earlier. Interesting to hear what others think.

Dod

tjh290633
Lemon Quarter
Posts: 4894
Joined: November 4th, 2016, 11:20 am
Has thanked: 391 times
Been thanked: 1911 times

Re: Smith (DS) Finals.

#323228

Postby tjh290633 » July 2nd, 2020, 11:22 am

There is a table further down the post which I found of interest:

Income statement - from continuing operations       2019/20   2018/19(1) 
(unless otherwise stated) GBPm GBPm
Revenue 6,043 6,171
Adjusted operating profit(2) 660 631
Operating profit 455 427
Adjusted return on sales(2) 10.9% 10.2%
Net financing costs (87) (71)
Share of profit of equity-accounted investments,
net of tax 7 9
Profit before income tax 368 350
Adjusted profit before income tax (2) 580 569
Adjusted income tax expense(2) (125) (127)
Adjusted earnings (2) 455 442
Profit from discontinued operations, net
of tax 237 12
Basic adjusted earnings per share(2) 33.2p 33.3p
Profit for the year attributable to owners
of the parent (including discontinued
operations) 527 274
Basic earnings per share from continuing
and discontinued operations 38.5p 20.6p
Basic earnings per share 21.2p 19.7p

(2) Adjusted to exclude amortisation and adjusting items (see note 3)

My view is that the Company is erring on the safe side, but will be a flourishing enterprise once the clouds have rolled away, indeed, it is now.

One of those to keep, I fancy.

TJH

idpickering
Lemon Half
Posts: 5898
Joined: November 4th, 2016, 5:04 pm
Has thanked: 1037 times
Been thanked: 2158 times

Re: Smith (DS) Finals.

#323229

Postby idpickering » July 2nd, 2020, 11:23 am

Dod101 wrote:I suspect Ian is right. I do not hold Smith but I am not expecting anything from my two cancelations (HSBC and Gleeson) nor anything more from my cutters (Shell, Imperial Brands and Admiral) although I would not be surprised if Admiral reinstated their Special at the half year.

After all it is only three months or so since most of those cuts were made and things are I imagine going pretty much as expected. I think towards the year end is more likely timing if at all this year. I would not expect any real reinstatements until the year end results announcements early next year but it would be great if they came earlier. Interesting to hear what others think.

Dod


Good post Dod, thank you, and I agree with you. Regarding what others think about the dividend situation with other holdings, maybe that could be in another thread rather than cluttering this one up?

Ian.

ReallyVeryFoolish
Lemon Slice
Posts: 799
Joined: October 5th, 2019, 12:06 pm
Has thanked: 576 times
Been thanked: 361 times

Re: Smith (DS) Finals.

#323231

Postby ReallyVeryFoolish » July 2nd, 2020, 11:26 am

tjh290633 wrote:My view is that the Company is erring on the safe side, but will be a flourishing enterprise once the clouds have rolled away, indeed, it is now.

One of those to keep, I fancy.

TJH

Sincerely hoping you are right. I was actually half expecting a future special dividend alongside future dividend from the one. Maybe I just expect(ed) too much. The company assets must have been flat out supplying brown paper/card packaging the last few months?

RVF

Arborbridge
Lemon Quarter
Posts: 4969
Joined: November 4th, 2016, 9:33 am
Has thanked: 1120 times
Been thanked: 1789 times

Re: Smith (DS) Finals.

#323237

Postby Arborbridge » July 2nd, 2020, 11:54 am

I discovered to my surprise that Smith's was in the account with cash in, so I've taken the opportunity of a small topup.

Arb.

Arborbridge
Lemon Quarter
Posts: 4969
Joined: November 4th, 2016, 9:33 am
Has thanked: 1120 times
Been thanked: 1789 times

Re: Smith (DS) Finals.

#323239

Postby Arborbridge » July 2nd, 2020, 12:01 pm

Arborbridge wrote:I discovered to my surprise that Smith's was in the account with cash in, so I've taken the opportunity of a small topup.

Arb.



PS, while I was at it, I topped up VOD, despite the cut as it was near to top of my rankings.

BTW, to counterbalance these, so keeping investments in proportion, I will also be buying more shares in ITs this month.


Arb.

Steveam
2 Lemon pips
Posts: 232
Joined: March 18th, 2017, 10:22 pm
Has thanked: 214 times
Been thanked: 109 times

Re: Smith (DS) Finals.

#323241

Postby Steveam » July 2nd, 2020, 12:20 pm

I've also added to my holding this morning. It's an underweight holding which I've been gradually increasing so this is an opportunity to add at what seems good value. I like the company for the longer term. I make this purchase in the context of having hoarded cash and increased cash buffers just in case things get much, much worse.

Best wishes,

Steve

GrahamPlatt
2 Lemon pips
Posts: 246
Joined: November 4th, 2016, 9:40 am
Has thanked: 83 times
Been thanked: 64 times

Re: Smith (DS) Finals.

#323247

Postby GrahamPlatt » July 2nd, 2020, 12:37 pm


Arborbridge
Lemon Quarter
Posts: 4969
Joined: November 4th, 2016, 9:33 am
Has thanked: 1120 times
Been thanked: 1789 times

Re: Smith (DS) Finals.

#323248

Postby Arborbridge » July 2nd, 2020, 12:39 pm

Steveam wrote:I've also added to my holding this morning. It's an underweight holding which I've been gradually increasing so this is an opportunity to add at what seems good value. I like the company for the longer term. I make this purchase in the context of having hoarded cash and increased cash buffers just in case things get much, much worse.

Best wishes,

Steve


Join the Chancer's Club :) Some will immediately criticise us both bot being "irrational", "unhyp" - or as one poster put it recently, he found us HYPers "insincere". Well, all I can say is: "Am I bovvered?"
I'll admit I've made san un-HYP off the wall decision based on what only amounts to a hunch - it won't improve my income position at the moment (to that extent it's a bad purchase), but hopefully it will next year.

Arb.

Arborbridge
Lemon Quarter
Posts: 4969
Joined: November 4th, 2016, 9:33 am
Has thanked: 1120 times
Been thanked: 1789 times

Re: Smith (DS) Finals.

#323250

Postby Arborbridge » July 2nd, 2020, 12:42 pm

GrahamPlatt wrote:https://www.lemonfool.co.uk/viewtopic.php?f=15&t=24066&p=322563#p322563


Thanks for that reminder: now we know why they were shorting. Some information may have leaked out. Nevertheless, if/when news improves, we will presumably gain when the shorts unwind amd relieve the downward pressure on the price.

Arb.

pyad
Lemon Slice
Posts: 326
Joined: November 4th, 2016, 10:17 am
Been thanked: 706 times

Re: Smith (DS) Finals.

#323279

Postby pyad » July 2nd, 2020, 2:52 pm

Arborbridge wrote:Join the Chancer's Club :) Some will immediately criticise us both bot being "irrational", "unhyp" - or as one poster put it recently, he found us HYPers "insincere". Well, all I can say is: "Am I bovvered?"
I'll admit I've made san un-HYP off the wall decision based on what only amounts to a hunch - it won't improve my income position at the moment (to that extent it's a bad purchase), but hopefully it will next year.

Arb.


I don't regard it as unHYP to buy or top-up suspenders in the current rather extraordinary climate. It's a risk of course cos we cannot know when they will resume divs and at what level, but it may well be a risk worth taking for HYPers who don't need the income immediately, given the depressed state of many potential HYP share prices and thus the potential good yields on resumed payouts.

Looking at SMDS results which weren't bad in the circs., it may be reasonable to assume that when payouts restart they will be at least held to the most recent year. That was 30/04/19 when they paid 16.2p. Thus on my assumption the potential future yield at 295p is 5.5% which looks adequate for an HYP share.

You could say that with their continued div suspension, following the fashion and precedent set by many other leading companies, SMDS is thinking inside the box.

Itsallaguess
Lemon Half
Posts: 5398
Joined: November 4th, 2016, 1:16 pm
Has thanked: 2169 times
Been thanked: 3971 times

Re: Smith (DS) Finals.

#323307

Postby Itsallaguess » July 2nd, 2020, 4:36 pm

pyad wrote:
Looking at SMDS results which weren't bad in the circs., it may be reasonable to assume that when payouts restart they will be at least held to the most recent year.

That was 30/04/19 when they paid 16.2p. Thus on my assumption the potential future yield at 295p is 5.5% which looks adequate for an HYP share.


I've always considered the requirement for a 5-year dividend payment-history for HYP contenders to be one of the most important legs of the HYP stool, and one which helps to provide a really good bellwether for future dividend trends. Actions speak louder than words when it comes to company results, so what better way to gauge the prospects of future payouts than to look and see how they've managed for a fairly lengthy period into their past...

As a current owner of SMDS, along with other shares that have cancelled their current dividends in relation to the COVID situation, I'm personally struggling to see how those shares can go from a relative '100% payout' situation, down to 0%, and then bounce back to their previous '100% payout' levels over a useful timescale, and I'm surprised to see that you might consider such a proposition to be a 'reasonable' assumption.

I of course appreciate that where there might be new cash to invest for income, then by not investing it in these 'dividend-cancelled' stocks and taking a 'wait and see' approach, we might limit the valid options that we have for accruing additional new income from such new capital at this time, but it really does seem to be a huge leap of faith to see such an assumption being made with regards to a company that has already been shown to be susceptible to the wider downstream affects of this virus, and that's even in an internet-facing delivery-market that should actually be booming...

Two very important things seem to be in play for these dividend cutters, with regards to both the level of any future dividends that might be resumed, and when they might actually do so, and I'm very surprised to see so many people advocating putting new capital into such shares when both of those important aspects are currently so unclear...

I'm an owner of SMDS, and will be keeping it as part of my wider holdings, but that's about as far as that goes in terms of allowing it to play a future part in my portfolio, and the thought of adding fresh capital to it whilst it's in it's current position would feel like a step too far, given the stringent hurdles it had to get over to be bought in the first place...

Cheers,

Itsallaguess

kempiejon
Lemon Quarter
Posts: 1613
Joined: November 5th, 2016, 10:30 am
Has thanked: 5 times
Been thanked: 416 times

Re: Smith (DS) Finals.

#323319

Postby kempiejon » July 2nd, 2020, 5:06 pm

Back in 2006 I bought my first SMDS, at the time they had over 5 years of flat or increased dividends, yielding around 4%. The payout halved in 2009 and was above pre cut level by 2013. I shuffled the holding into my ISA buying at lower yield and banking a capital gain to boot. At zero income for the foreseeable not a space for my spare cash. If past performance is anything to go by they might be quick at re-instating as I think they were the first of my holdings to return income to pre-cut levels.


Return to “HYP Practical (See Group Guidelines)”

Who is online

Users browsing this forum: No registered users and 8 guests