Pre-close Trading Update

RNS Number : 3211R
Smith (DS) PLC
29 April 2009



DS Smith Plc, the international packagingsupplierand office products wholesaler, today issues the following trading updateahead of itsfull-yearresults announcementfor the yearto 30 April 2009.


The Group's overall tradingperformancein the second half of 2008/09has beenbroadlyin line withmanagement's expectations at the time ofour InterimManagementStatementissued on 17February2009. As reported previously, the Group's operating resultscontinue tobeadversely affectedby volatile and weaker demand in almost all our markets.

The Group'saction programme, focused on cost reduction and cash generation, iswell-advancedand is now being further extended.We previously announced that the programme was expected to have an annual cash benefit of circa £25 million and an up-front cash cost of circa £23 million, the majority of which will be incurred in financial year 2008/09. It is now anticipatedthat a further £5millionof cash costwill be incurred in financial year2009/10 on the restructuring of a number of smaller businesses which have moved into losses. All these cash costs will be recognised as exceptional items.

Despite significant capital expenditure and the cash costs associated with the above action programme, the Group remains cash generative. This has been assisted by our continued focus on reducing further the Group's working capital.


Our Paper and Corrugated Packaging businessescontinue to beimpactedbya combination ofthe lower demand for boxes andbya continuedfall intheUKprice ofcorrugated case material (CCM)duringthesecond half of our financial year.The Group's strategy of being a net buyer of paper and focusing on boxes for the fast-moving consumer goods sector of the market has mitigated the impact of the lower CCM prices. The weaker performanceoftheUKpaper business has been partially offset byastrongeroverallperformance in corrugated packaging, where we have additionally benefited from the effects of the strength of the euro on the reported results ofour continental European businesses.

In Plastic Packaging,the returnable transit packaging businesscontinues to beespeciallyaffected by weakerdemanddue to itsconsiderableinvolvementwithparticularindustry sectors such as automotive and construction.

Office Products Wholesaling

The slow-down in the European marketcontinues. This is particularly in traditional office products but electronicoffice suppliesare also affected. Spicers' overall sales performance remains relativelystrongbut is being progressively impacted by theweakening market. In theUK,we havereinforcedour market position but margins are under considerable pressure,reflecting the competitive trading environment.Theperformanceof our continental European businessisgood, being enhanced by the effects of currency translation.


Wecontinue to work with our Ukrainianassociate, Rubezhansk, and its banks to resolve the position in relation toitsUS dollar denominated loan. In ourFebruaryIMS wedescribed in detail the circumstances relating to the loan andhowtheoutcome of thecurrentreview may affect the Group's Income Statement. Rubezhansk continues to trade profitably and to generate cash.

DS SmithPlcplans toannounce its results forfinancial year2008/09on25June2009.


DS Smith Plc

020 7932 5000

Tony Thorne, Group Chief Executive

Steve Dryden, Group Finance Director

Financial Dynamics

020 7269 7140

Andrew Dowler

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