Amazon turns British cardboard box maker into FTSE giant

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Britain’s leading cardboard box maker has revealed that the rise of internet shopping has helped its sales surge by more than £1billion in just five years.

London-based DS Smith, which produces millions of tons of cardboard and plastic packaging a year, joined the FTSE 100 last week.

Its customers include Amazon, Asos and Next – some of the most successful retailers to have tapped into the online spending revolution.

Sales surge: London-based DS Smith, which produces millions of tons of cardboard and plastic packaging a year, joined the FTSE 100 last week

Sales surge: London-based DS Smith, which produces millions of tons of cardboard and plastic packaging a year, joined the FTSE 100 last week

Yesterday, DS Smith reported sales of £2.8billion for the six months to October 31, up from £1.7billion over the same period five years ago.

It was 19 per cent up on the first half of last year.

Profit dipped 1 per cent to £144million, although this was described as a temporary result of recent price rises for materials.

Miles Roberts, DS Smith’s chief executive, said that while internet shopping uses six times more packaging than High Street stores, his firm was also benefiting from the rising demand for recyclable boxes.

Roberts, 53, added: ‘We are seeing very strong growth in the use of cardboard fibre-based packaging, and ecommerce is a major driving force.

‘The vast majority of what we produce is made from fully recyclable materials. It is a big part of what we do and we expect it to get even bigger.’

BOXING CLEVER 

  • 8.2m – Tons of packaging produced by DS Smith each year
  • 9 – Paper mills operated by the company
  • 5.2m – Tons of paper recycled by the firm each year
  • 14 – Days taken for a box to be recycled and back on someone’s doormat again
  • £2.8bn – Made in sales by the firm in the six months to October 31

 

Roberts said that DS Smith could now turn paper into cardboard boxes that can be used for packaging just 14 days after it is collected.

The company has nine paper mills in Europe and has embarked on an expansion in the US, acquiring rival Interstate Resources for £850million. 

Roberts said the acquisition went well and the estimated savings of £18.6million originally predicted were likely to now top £22.3million.

‘We are ahead of our expectations,’ he added.

Interstate operates mainly on the east coast, from New Jersey to Georgia, and is planning two more packaging plants there.

Meanwhile, DS Smith has bought Romanian firm Ecopack and Ecopaper for £186million.

DS Smith was founded in 1940 as a box-making business in London and now serves online shopping websites and European consumer goods operators. 

It competes with Smurfit Kappa, RPC Group and Mondi, which issued a profit warning earlier this year, as the sector has been hit by extra costs due to a surge in paper and pulp prices.

Roberts said the outlook for next year was positive but there was some concern about the possible impact of the UK’s exit from the European Union in 2019. ‘What we do not want is for our flow of trade to be interrupted,’ he said.

‘We are waiting to get some clarity and we hope that will come as quickly as possible.’

The company’s ascent to the heights of the FTSE 100 came as Merlin Entertainments, Conva Tec Group and Babcock International dropped out via the quarterly review last month.

DS Smith now has a market capitalisation of £5.6billion.

Yesterday its shares fell 2.6 per cent, or 14p, to 525p.

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