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Packaging company DS Smith has reported a 2% decline in revenue to £6.04bn in its full-year results, which saw operating profit climb 6% to £455m, due to reduced pricing and volumes in Europe.
The company said it saw a positive contribution from European corrugated box volumes of £22m for the 12 months to 30 April 2020, and an incremental nine-month contribution from Europac, which was acquired in mid-January 2019, of £376m.
But DS Smith said this was offset in Europe by reduced pricing of external paper, recyclate and box prices, down £285m year on year, and a decline in other volumes particularly due to increased paper and recyclate integration and reduced volumes of corrugated sheet, down £175m.
The company said that performance for the first 10 months of the financial year was 'robust', with a 'relatively limited' impact on operating profit of approximately £15m in the final two months of the year from the COVID-19 pandemic.
It reported 'much more disruption' in North America during the pandemic, due to significant variations in activity levels between different customers and different states, resulting in a fall in packaging volumes of 16% in April.
The company announced that adjusted operating profit increased by 5% on a constant currency basis to £660m during the year, due to its focus on the margin within the business, which was reflected in a record return on sales for the group of 10.9%.
DS Smith has postponed dividend payments until the economic outlook becomes clearer.
During the year, the company completed the disposal of its plastic packaging business for £436m.
Group chief executive Miles Roberts said: 'Our business model is resilient, built on our consistent FMCG and e-commerce customer base.
'In the short term, however, the impact of COVID-19 on the economies in which we operate is likely to impact volumes to industrial customers and add to operating costs. In particular, infrastructure constraints have driven elevated OCC prices, although we currently expect the impact to be limited to H1.'