Interim Management Statement

RNS Number : 5973C
Smith (DS) PLC
03 September 2008



DS Smith Plc, the international packagingsupplierand office products wholesaler,todaypublishesits Interim Management Statement in respect of the periodsince1May2008. DS Smith Plc will be holding its Annual General Meeting today at 12 noon.

DS SmithGroup

Overall trading in thefirstquarter of financial year 2008/09has been in line with management's expectationsas describedat the time of the Group'sPreliminary Results inJune.The Group's total operating result in the quarter wasalso in line withthat of the same periodinthe previous year. As previously reported,operating performance is being impactedby slowing demand and higher input costs, particularly in ourUKbusinesses. To date,the effect of thishas been offsetbybetter results fromourcontinental European businesses.

As part of its ongoing funding programme, theGrouphas further strengthened itsbalance sheetbyrecentlyrenewing, for a period of five years,its syndicated revolving credit facility. The Groupnow has a facility of£287.5 million(2007/08: £250 million)expiring in 2013(2007/08: 2010).Save for the refinancing referred to above, there has been no significant change to the financial position of the Group since the publication of the results for the financial year to 30 April 2008.


Europeandemandfor corrugated packaging(boxes)is slowing; industrystatisticsindicate that in the first six months of2008the marketwas down byover 1%on the same period in 2007,with the second quarter being weaker than the first. This lowerdemandhas resulted inasignificantfall incorrugated case material (CCM) pricesin continental Europe,althoughCCMpricesin theUKhave remained firmer due to the strength of the euro. The high level ofenergy and waste paperinput costs is exerting pressure on CCM margins throughout the industry;a number of continental producers have recently announced CCM price increasesto recover these costs. In box manufacturing, thecontinuingmove towards higher value-added retail-ready boxesiscontributingto agreater level of capacity utilisation, especially in theUK.

In ourUKPaper and Corrugated Packaging segment, we haveoutperformed themarket in boxes and are benefiting fromtheactionstakento strengthen our position in the fast-moving consumer goods sector of the market. The segment's overall results have been affected by lower CCM sales and higher input costs.The project to commission the lightweight CCM machine at Kemsley Mill in January 2009 remains on schedule.

TheContinental EuropeanCorrugated Packagingsegment, which is a net buyer of CCM,hasmade substantial progress. The Polish businesshasachievedgoodgrowth, particularly in higher value-added products, supported by further investment. Saleshavealso advanced well inItaly, whilethe French businessisbenefitingfrom operational improvements at its mainfacilities.

In Plastic Packaging,performancein liquid packaging and dispensinghas beenencouraging, while inreturnable transit packagingit hasbeenmorevariable depending upon the marketsector served. A programmeto recoverthe recent further increases in polymercoststhrough price increases is underway.

Office Products Wholesaling

Against a backdrop of slowingdemand for office products,Spicers'has experienced a decline in volumes of traditional office products. Sales ofelectronic office supplieshave grown strongly as Spicers has increased its participation in this important, although lower margin, sector of the market. We maintain our drivetorebuildprofits in theUKandcontinuethe progress of ourcontinental European businesses.


It is still early in the Group's financial year. Despite thetough trading environment, theGroup'sgoodmarket positions,continued tightoperationaldisciplineand strong balance sheetunderpin the Board's confidence inachieving a robustperformancein 2008/09.

The Groupplans to announce itsresultsforthehalf yearto31October2008on3December2008.


DS Smith Plc

020 7932 5000

Tony Thorne, Group Chief Executive

Steve Dryden, Group Finance Director

Peter Aubusson, Group Communications Manager

Financial Dynamics

020 7269 7140

Andrew Dowler

A conference call for analysts and investors, hosted byTony Thorneand Steve Dryden, will take place today, 3 September, at 8.15 am BST. The dial-in numbers are:

UKparticipants: 0208817 9301 or 0845 634 0041

International participants: +44 208817 9301

A recording of this conference call will be available by telephone from one hour after the call has ended until 17.00 BST on 10/9/08. The dial-in numbers for this recording are:

UKcallers: 0207769 6425

International callers: +44 20 7769 6425

Replay security code:1379541#

A recording of the call will also be available through the Investor Relations section of our 15.00 BST today.

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