|Delayed - 08/05 11:31:28 am|
DS Smith boosted by online shopping surge, disappoints on dividend
|07/02/2020 | 04:53am|
By Yadarisa Shabong
Cardboard maker DS Smith saw a surge in demand for boxes from e-commerce customers during the coronavirus lockdown as online shopping boomed, but the company said it was too soon to restart dividend payments, sending its shares down sharply.
DS Smith in April had said it would not pay an interim dividend and on Thursday did not declare a final dividend because of the uncertain global environment.
"We will resume dividends as soon as we have some greater confidence in the outlook of the economies overall," Chief Executive Miles Roberts said.
"What we've seen in a number of countries is that when the lockdown ends, people continue buying on e-commerce," Roberts said.
"We've also seen a further increase in our customers' demand for sustainable, recyclable packaging ... during this crisis as people are more concerned about environmental issues."
DS Smith has also noticed a rise in supplies in drinks, frozen food and dry packaged grocery categories as people stocked up on food.
The maker of cardboard boxes and recycled paper, reported an adjusted operating profit for the year to end April 2020 of 660 million pounds ($825.26 million), up from 631 million pounds last year.
DS Smith said profit took a 15 million pounds hit in the last two months of its financial year and declining box volumes, weakness in the automotive and aeronautical sectors and higher costs would also affect profits in first half of 2021.
Analysts at Jefferies said: "While we understand with limited visibility, not declaring a dividend is the prudent decision, we expect it to disappoint the market and potentially stoke some concerns."
DS Smith's shares were down 7% by 0845 GMT.
Established in the 1940s by the Smith brothers, the company has expanded into the United States and Europe with the 2018 acquisition of Spanish rival Europac and offloaded its plastics division to focus on paper and fibre.
($1 = 0.7997 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Shailesh Kuber/Sherry Jacob-Phillips/Jane Merriman)