DS Smith hones in on recycled packaging after selling paper business

By Helen Glaberson

- Last updated on GMT

Related tags Marketing Management Strategic management

The sale of DS Smith paper packaging business represents a “key strategic step” in the firm’s bid to be the leading recycled packaging supplier for consumer goods.

The firm said it had received an offer for its European office products wholesaling business Spicers from Unipapel for an enterprise value of £200m.

Proceeds from the disposal will be used in short term to reduce net debt and to reinvest and expand geographic coverage in its packaging business, said DS Smith.

Previously, Miles Roberts, DS Smith’s group chief executive said the company had identified attractive opportunities for the packaging business within the UK and France.

He said the group also saw very significant potential in the faster growing FMCG markets in Central and Eastern Europe.

“Corrugated packaging has growth prospects ahead of GDP and outperforms other materials on ease of recycling,” ​he added.

Explaining how it believes DS Smith can differentiate itself from the competition in the corrugated packaging arena, the company pointed to its “cradle-to-cradle​” service. As well as offering recycled packaging to manufacturers like Nestle and Procter & Gamble, in the UK the company manages the recycling of many of the largest retailers.

Strong growth

The strategy to focus on its recycled packaging business was first revealed in a strategic review last December, when the company delivered its 2010/11 half-year results.

However, back in June 2010, the firm announced an intention to review its business strategy with the aim of creating a “growing business that is more focused, producing higher margins and returns with less cyclicality.”

Another indication of the plans to streamline the business was in September 2010, when DS Smith bought Otar, a French supplier of recycled corrugated packaging.

In December last year, DS Smith reported strong half year results, reflecting strong volume and revenue growth from its packaging business, according to Roberts.

The company posted a 10.5 per cent sales increase to ₤1,174.2m and operating profit rose 10.8 per cent to ₤60.5m.

Related topics Packaging & Design