DS Smith share price drops as box maker notes ‘market weakness’
Box maker DS Smith has said it is continuing to trade in line with profit expectations despite seeing lower corrugated box volumes.
The London-based group, which supplies packaging and paper products to the likes of Amazon and Brewdog, said that volume sales were lower in the third quarter due to “market weakness”, with businesses de-stocking over Christmas and New Year.
Investors took note of the lower volume sales, with shares falling over four per cent after the update.
Despite the fall, shares continue to trade up on the year, with DS Smith’s share price having risen almost four per cent over the last year, not least thanks to a pandemic-driven boom in business.
However, the group stressed that its “robust and flexible” supply chain had offset the lower volumes.
“We have continued to perform well in the second half of the year despite the volatile macro-economic conditions. As expected, profitability and returns have grown strongly and cash generation remains good,” Miles Roberts, group chief executive, said.
He added: “We continue to stay very close to our customers and their evolving needs, which, together with a relentless cost focus and robust supply chain, positions us well for the remainder of the year and into our next financial year.”
DS Smith has so far proven that it is capable of weathering the difficult economic storm which has impacted many businesses, including the impact of rising paper costs.
In December, the group reported a pre-tax profits leap of 80 per cent for the period ending October 2022. Furthermore, it’s revenue of £4.3bn was up 28 per cent year-on-year.