Spicers’ parent company’s profit slides

6 December 2006 — London (UK): DS Smith, Spicers’ parent company, has reported a fall in adjusted operating profit for the six months ended 31 October 2006 from £33.2 million ($65.4 million) last year to £30.4 million.

Chairman Antony Hichens said: "The Group’s result in the first half of 2006/07 was, as anticipated, affected by increases in input costs in Packaging and by lower profits in our UK Office Products Wholesaling business. The impact of these factors was partly mitigated by our drive to pass on the increased input costs through raising selling prices and the benefits of the strategic actions we have taken to exit unprofitable operations and reduce costs."


According to the company, operating income in the Office Products Wholesaling business "was sharply lower due to the decline in the profitability of the UK business".


Operating profit for the division fell to £3.2 million from £6.9 million a year earlier.


An ongoing cost reduction programme is said to be under way at Spicers UK "aimed at raising operating performance and rebuilding profits; the UK management team has been strengthened and extensive action has been taken to improve the sales mix on the back of raised service levels."


Hitchens concluded: "The outlook for the Group for the second half of the financial year remains unchanged. The turnaround programme at Spicers UK is under way and we expect some initial benefits in the second half of the year with more coming through in 2007/08."