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UK’s DS Smith gains from orders packed and shipped in online boom

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UK's DS Smith gains from orders packed and shipped in online boom 1

By Pushkala Aripaka

(Reuters) – DS Smith expects demand for its paper and fibre-based packaging supplies to continue growing in 2021, fuelled by a pandemic-drive boom in online shopping that will help the British firm deliver annual results in line with expectations.

The cardboard maker, which counts e-commerce firms and consumer packaged goods companies as major customers, is benefiting from heavy spending on packaging materials to ensure items are delivered safely.

Chief Executive Miles Roberts said the COVID-19 crisis had accelerated growth in e-commerce and demand for sustainable products, as consumers stuck at home turned to the internet for everything from daily needs to clothing.

“We are very strongly positioned to continue gaining from this momentum,” Roberts told Reuters, after DS Smith reported strong trading over the Christmas holiday period and saw signs of recovery in demand from industrial customers.

The FTSE-100 firm, whose shares were up about 2% in early trade, has been in the headlines after Bloomberg News reported that rival Mondi was considering making a takeover offer.

Roberts declined to comment on “what other companies may be doing” and said DS Smith’s board was “focused on maximising value for shareholders in whatever form that comes in.”

The company has seen a rise in costs as paper prices climbed but made up for that by charging customers more, it said.

DS Smith supplies products to companies such as Amazon, Nestle and Unilever.

Profit in the six months to October more than halved due to lower prices and weak industrial demand, but the company resumed paying a dividend to show confidence in its ability to ride out the crisis.

Roberts said DS Smith intended to continue paying shareholders on the back of an expected strong cashflow performance for fiscal 2020.

(Reporting by Pushkala Aripaka and Priyanshi Mandhan in Bengaluru; Editing by Anil D’Silva and Edmund Blair)

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