DS Smith is to push through another price increase in corrugated case material (CCM) this week to recover a "substantial" rise in input costs.The UK packaging and paper group said in its first ever interim management statement, published today (5 September), that its energy and waste paper costs had remained high. As a result of continued strong demand for waste paper from Asia, it also faces further prices increases in the principal raw material for recycled CCM.
DS Smith group chief executive Tony Thorne said the firm would also be "going out for further box price increases during the coming months to recover higher costs in the supply chain".
Thorne said UK paper prices had increased by 55-60% in the past two years, from a low of £200 per tonne to £325 per tonne.
To recover this, DS Smith raised its box prices by around 14% in the two years to June and will need a further 6-8% increase to recover its costs.
"I'm confident that we'll reach this," said Thorne.
Thorne said the UK corrugated packaging market had been "stubbornly flat" so far this year, despite growth in retail-ready packaging.
Plastic packaging has been affected by rising polymer prices and efforts to recover these have met with limited success.
"We are still looking to make improvements and must pick up the pace as we go through the year," said Thorne.
The firm is restructuring its European liquid packaging and dispensing business, and will close a German bag-making and injection-moulding business and transfer the injection-moulding part to the UK.
"We're generally holding our own in this business," said Thorne. "We're suffering from margin erosion rather than losing market share."
He said the priority for the rest of the financial year would be to continue to recover high input costs in the packaging business.
DS Smith will release its interim results for the half-year to 31 October 2007 on 5 December.
Source: packagingnews
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