Smith(DS) PLC (SMDS)

[fisher]

Smiths run recycling of cardboard and Board, so if anyone is short, it shouldn't be them. TJH

The problem is that the cost of the source product to be recycled has increased. There is a quote from Bank Of America from earlier this month here:

"Containerboard prices are recovering and box demand is strong, fuelled by e-commerce, and the trend will continue, BofA analyst Alexander Berglund said.

But the cost of paper for recycling has almost doubled from 2020 and this will affect boxmakers Smurfit and DS Smith most. It will take those companies about a year to increase prices to protect margins whereas Mondi is more insulated and has greater exposure to higher containerboard prices, Berglund said."

https://www.investments.halifax.co.uk/r ... 4&type=bsm

[tjh290633]

The problem is that the cost of the source product to be recycled has increased.

I suspect that the recyclers are paid to take the waste material, as it avoids landfill tax.

With recycled glass, there is a limit to the distance it can be transported, if it is to be cheaper than using raw materials. If it came free, as it does for that produced in the factory, then it is fine. If it has to be hauled from the London area to Yorkshire, not so fine.

TJH

[Bouleversee]

Did you read all of this article linked by Steveam earlier in this thread?

https://www.bbc.co.uk/news/business-55878062

There isn't enough cardboard being recycled to enable companies like DS Smith to fulful demand.

[tjh290633]

Did you read all of this article linked by Steveam earlier in this thread?

https://www.bbc.co.uk/news/business-55878062

There isn't enough cardboard being recycled to enable companies like DS Smith to fulful demand.

I'm not surprised. You cannot work on recycled material only. You have to input some new raw material.

TJH

[csearle]

II never cease to be amazed by the huge amount of flattened boxes put out for collection on the cobbled entrance drive of my neighbours opposite, often left to soak in the rain. I hope they can still be recycled.

I imagine that soaking card is probably one of the early steps of the recycling process so hopefully not an issue. C.

[idpickering]

Trading Statement

Trading continues to progress well, with the trends and momentum described in our H1 results on 10 December 2020 continuing into H2. We are seeing particularly strong box volume performance driven by our differentiated offering, and whilst input costs have increased, overall trading continues in line with our expectations.

Group like-for-like corrugated box volume growth has accelerated compared to Q2 of our financial year, with the expected e-commerce and FMCG strength over the Christmas period continuing into 2021, together with some encouraging signs of recovery from our industrial customers. Our Northern European and North American regions have seen the most positive performance, reflecting continued strong growth with our largest customers and increasing utilisation of our plant in Indiana.

Our North American business continues to deliver significantly improving results as a consequence of good domestic volume growth, with corresponding reduced exports of paper, and increasing pricing.

The volume growth reflects our strong performance across many sectors and customer groups. We are providing our customers with more ways and easier options to do business with us via our leading digital platforms that are proving to be very popular. These platforms are fully aligned with our unique Circular Design principles, to enhance recyclability and reusability of our products.

Input costs, including OCC, have increased during the period which, together with high demand, continues to drive higher paper prices. We have started to recover these additional costs through higher packaging prices and our expectation is, with the customary lag, they will be fully recovered and underpin continued momentum into FY22.

Working capital and cash generation remain keys areas of focus and we anticipate a continued strong free cashflow performance for the full year with cash conversion over 100 per cent.

https://www.investegate.co.uk/smith--ds ... 00079360Q/

[tjh290633]

Did you read all of this article linked by Steveam earlier in this thread?

https://www.bbc.co.uk/news/business-55878062

There isn't enough cardboard being recycled to enable companies like DS Smith to fulful demand.

I'm not surprised. You cannot work on recycled material only. You have to input some new raw material.

TJH

Further to that, I noted in https://www.investegate.co.uk/smith--ds ... 00079360Q/ the comment:

We are a leader in sustainability and operate a circular business where we collect and recycle more packaging than we produce. We are focused purely on fibre-based products and that is why our recycling rates are 99% companywide. We build in recyclability, reuse and plastic replacement into our packaging through our Circular Design principles, at the heart of our 'Now and Next' Sustainability strategy, launched in the autumn 2020.

It would appear that SMDS do in fact work on virtually 100% recycled material.

TJH

[absolutezero]

It would appear that SMDS do in fact work on virtually 100% recycled material.

TJH

They also work on being rather stingy with their dividends too...
Wondering if its one for the bin. Or rather 100% recycled into SSE....

[Bouleversee]

Don't you want to wait and see what happens re the rumoured t/o by or merger with Mondi? At least SMDS share price is going the right way whereas SSE is not. Why do you think the latter might be a good buy a.t.m? I ask because I have a reasonably large holding in SSE and am a bit worried about their trend.

[absolutezero]

Don't you want to wait and see what happens re the rumoured t/o by or merger with Mondi? At least SMDS share price is going the right way whereas SSE is not. Why do you think the latter might be a good buy a.t.m? I ask because I have a reasonably large holding in SSE and am a bit worried about their trend.

Income. That is all.

[idpickering]

Investor Seminar

DS Smith will today be hosting the first in a series of seminars for financial analysts and investors, starting at 3.00pm (UK).

The virtual event will be introduced by Miles Roberts, CEO of DS Smith, and comprise presentations from a number of the management team including our Head of Strategy and Head of Sales, Marketing and Innovation. After an extraordinary year, we will discuss our views on "Packaging in a post-Covid world", together with a focus on the evolving and exciting trends in e-commerce and our leading customer offering to drive continuing volume and value-added growth.

DS Smith issued a Q1 trading update on 3 March 2021 and no new material financial information or trading update will be given today. DS Smith will issue a pre-close trading update for the period ending 30 April 2021 on 29 April.

The event will be via live webcast, with the link for registering available at http://www.dssmith/investors/results-an ... ations.com . The webcast will also be available for replay. The slide deck will be made available on our website at the start of the event.

https://www.investegate.co.uk/smith--ds ... 00025146V/

[idpickering]

Pre-close statement

Miles Roberts, Group Chief Executive, said:

" I am pleased to report continued positive momentum across the business. I am particularly proud that throughout the challenges of the pandemic, our colleagues have responded magnificently, keeping all of our operations open and maintaining the highest standards in service and quality for our customers.

As a purely fibre-based business we are benefiting from accelerating consumer trends in online shopping and the drive for a more environmentally conscious life. Environmental sustainability is at the heart of our strategy and we are excited at the significant opportunities this presents for our packaging solutions and, despite the general macro-economic uncertainty, for sustained growth across the business.

https://www.investegate.co.uk/smith--ds ... 00089826W/

[csearle]

When they say they are a "purely fibre-based business" I presume they mean the minuscule fibres that make up cardboard. Directorspeak extraordinaire! C.

[BobGe]

When they say they are a "purely fibre-based business" I presume they mean the minuscule fibres that make up cardboard. Directorspeak extraordinaire! C.

They mean not plastics.

[Arborbridge]

When they say they are a "purely fibre-based business" I presume they mean the minuscule fibres that make up cardboard. Directorspeak extraordinaire! C.

I think that can be forgiven and it's certainly less opaque than some directorspeak driven euphemisms.
(if tat isn't too opaque )

I take it that fibre-based is probably more an everyday description within the industry than it is an attempt to obscure the meaning. They could have said tree based or plant based, but I guess "fibre" covers all the possible sources of natural products plus recycling (?).


Arb.

[idpickering]

Full year results

Here; https://www.investegate.co.uk/smith--ds ... 00066204C/

Also posted on HYPP.

Ian.

[daveh]

Disposal of paper mill in the Netherlands:
https://www.investegate.co.uk/smith--ds ... 00034389F/

DS Smith Plc - Sale of De Hoop paper mill in the Netherlands

DS Smith is pleased to announce the proposed sale of its De Hoop paper mill in the Netherlands to De Jong Packaging for a cash consideration of €50 million (c. £43 million). The mill produces c.370k tonnes of mainly heavier grades of recycled paper per annum.

[daveh]

AGM Trading statement
https://www.investegate.co.uk/smith--ds ... 00029029K/

Miles Roberts, Group Chief Executive, said:

"I am very pleased with the progress made during the financial year to date. 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. Consequently overall trading continues to strengthen in line with our expectations.

The long-term structural growth drivers of e-commerce and sustainability have been accelerated by the effects of Covid. Over many years, we have built a business that is ideally positioned to benefit from these growth drivers. Accordingly, while the macroeconomic environment remains uncertain, we remain confident about the prospects for the business in this financial year and beyond."

Looks like volume up, but input costs up, so pressure on margins, but they say they are making good progress on putting up prices to support margins.

[pje16]

Did you read all of this article linked by Steveam earlier in this thread?
https://www.bbc.co.uk/news/business-55878062
There isn't enough cardboard being recycled to enable companies like DS Smith to fulful demand.

My brother runs factory that has to package its products
He told me months ago they couldn't get any cardboard boxes as they had all been bought by Amazon - hardly a surprise

[Itsallaguess]

Looks like volume up, but input costs up, so pressure on margins, but they say they are making good progress on putting up prices to support margins.

Thanks - they've recovered nicely from the blip this time last year - up around 70% over a 12 month period.

I'm happy with my holding for the long term.

Cheers,

Itsallaguess