Having hit an all-time high of £5.79 in mid-June, it has all gone horribly wrong for DS Smith shares.
Just a few days after reaching that record peak the company’s full year results sparked a sharp decline, investors unhappy with the news that its domestic expansion plans had been ‘heavily scaled back’ due to the uncertainty surrounding Brexit.
Though the FTSE 100 packaging firm stabilised around £5 as summer turned to autumn, October left it, like most of its index-peers, severely damaged. There’s been little let up since then either, with it recently striking a 2 and a half year-plus low of £3.28. DS Smith shares now sit at a current trading price of £3.38.
Between that aforementioned full year release and now, DS Smith has posted a couple of updates.
The first was September’s Q1 statement, in which it said that its ‘recovery of input cost increases from earlier in the calendar year’ – related to rising paper costs – was in line with expectations, while claiming its €1.9 billion takeover of Spain’s Europac would be completed before Christmas.
The next came in November, with the company stating that it expects half year return on sales and adjusted operating profit to be ‘materially ahead of the comparable period’ thanks to the aforementioned recovery of increased input costs and good volumes of growth from its ‘highly resilient’ fast-moving consumer goods-focused business.
What to expect
For reference, half-year 2017 results saw a 6% jump in adjusted operating profit to £251 million, alongside a 60 basis points decline in return on sales to 9.0%. These are the numbers DS Smith needs to substantially surpass on Thursday.
Investors will also want a word on the nearly completed Europac deal, as well as an update on the strategic review of its Plastics division launched back in June.
DS Smith shares have a consensus rating of ‘Buy’ alongside an average target price of £5.78.
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