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Smith (DS) Half Yearly Results

Practical discussions about equity High-Yield Portfolios (HYP) for income
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idpickering
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Smith (DS) Half Yearly Results

#184975

Postby idpickering » December 6th, 2018, 7:06 am

Highlights

· Successful and differentiated business model

o Return on sales margin +120 bps

o Good organic volume growth(2) of 3.2%

o Excellent cost recovery reflects business mix and strength of business model

o Growth from FMCG and e-commerce leadership

o US acquisition fully integrated and delivering well ahead of acquisition case

· Strong balance sheet

o Increase in cash flow from operating activities from continuing operations

o Net debt / EBITDA(6) (excluding rights issue proceeds) fallen to 2.1x

o Refinancing complete - new long-term facility

o Plastics strategic review making good progress

· Europac acquisition completion expected around calendar year end

o Reported performance to Q3 2018 in line with expectations

o Integration planning well advanced

· Compelling commercial differentiation and structural drivers for growth

o E-commerce, sustainable packaging, dynamic retail changes

o DS Smith innovation-led solutions for multinational customers

· Good momentum into H2

1.

"We are very pleased with the progress we have made over the last six months. We have strong momentum in the market, delivering good top line growth and substantially increased profit levels. We continue to win market share through our strong FMCG presence and our leadership in both e-commerce and sustainable packaging. DS Smith is extremely well positioned to capitalise on these ongoing growth trends and we are confident about the future prospects for the business."

And later;

Dividend

The Board considers the dividend to be an important component of shareholder returns. In considering dividends the Board will be mindful of the Group's leverage, earnings growth potential and future expansion plans. As first set out in December 2010, our policy is that dividends will be progressive and, in the medium term, dividend cover should be on average 2.0x to 2.5x through the cycle.

The Board declares an interim dividend for this half year of 5.2 pence per share (H1 2017/18: 4.6 pence per share). This represents an increase of 14%, demonstrating the confidence of the Board in the outlook for the Group. The dividend will be paid on 1 May 2019 to ordinary shareholders on the register at the close of business on 5 April 2019.




https://www.investegate.co.uk/smith--ds ... 00045981J/

Dod101
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Re: Smith (DS) Half Yearly Results

#184978

Postby Dod101 » December 6th, 2018, 7:29 am

I do not hold (or indeed know much about) D S Smith, but the interim dividend is payable on 1 May 2019 for a half year to 31 October 2018, that is into the next financial year! Is this a record delay?

Dod

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Re: Smith (DS) Half Yearly Results

#184982

Postby Arborbridge » December 6th, 2018, 7:56 am

The yield chart is interesting:

https://www.dividenddata.co.uk/dividend ... ?epic=smds

(Check the 5 and 10 year periods)

The yield is fairly constant but occasionally throws up opportunities. I do hope this is an opportunity and not a "Sorrell" moment, as this company is in my WyfHYP and heading for a topup.

Arb.

idpickering
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Re: Smith (DS) Half Yearly Results

#184984

Postby idpickering » December 6th, 2018, 8:11 am

I don't hold these, and am not tempted by the 4.5% yield on offer, just for the sake of more diversification.

Ian.

dspp
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Re: Smith (DS) Half Yearly Results

#184996

Postby dspp » December 6th, 2018, 9:22 am

I don't hold these, but they have been on my screen on a number of occasions.

Qualitatively they are a well run business, and operating in an interesting area of the paper/packaging business. At this moment that segment is capacity constrained in many parts of the world. In some countries there are people building paper mills just to produce pizza boxes, I kid you not. DS have ridden the growth of internet shopping and FMCG perfectly. Will it continue ?

regards, dspp

Arborbridge
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Re: Smith (DS) Half Yearly Results

#184997

Postby Arborbridge » December 6th, 2018, 9:25 am

dspp wrote:I don't hold these, but they have been on my screen on a number of occasions.

Qualitatively they are a well run business, and operating in an interesting area of the paper/packaging business. At this moment that segment is capacity constrained in many parts of the world. In some countries there are people building paper mills just to produce pizza boxes, I kid you not. DS have ridden the growth of internet shopping and FMCG perfectly. Will it continue ?

regards, dspp


Internet shopping still needs packaging and protective packing inside. How the balance of the market will alter no one can predict - a perfect example of not trying to second guess the future course of events.

tjh290633
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Re: Smith (DS) Half Yearly Results

#184998

Postby tjh290633 » December 6th, 2018, 9:27 am

Dod101 wrote:I do not hold (or indeed know much about) D S Smith, but the interim dividend is payable on 1 May 2019 for a half year to 31 October 2018, that is into the next financial year! Is this a record delay?

Dod

It is the usual delay for SMDS. They beat SSE in the delay stakes by a few days.

TJH

dspp
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Re: Smith (DS) Half Yearly Results

#184999

Postby dspp » December 6th, 2018, 9:28 am

Arborbridge wrote:
dspp wrote:I don't hold these, but they have been on my screen on a number of occasions.

Qualitatively they are a well run business, and operating in an interesting area of the paper/packaging business. At this moment that segment is capacity constrained in many parts of the world. In some countries there are people building paper mills just to produce pizza boxes, I kid you not. DS have ridden the growth of internet shopping and FMCG perfectly. Will it continue ?

regards, dspp


Internet shopping still needs packaging and protective packing inside. How the balance of the market will alter no one can predict - a perfect example of not trying to second guess the future course of events.


Sorry, I was not explaining myself well enough. Internet shopping & modern logistics solutions has increased the average amount of packaging per product. That has driven the packaging part of DS. Similarly a lot of FMCG is really food in one form or another, and again that requires packaging from DS et al. So I think we fully agree, but worth saying for the benefit of anyone out there who does not know this.

regards, dspp

IanTHughes
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Re: Smith (DS) Half Yearly Results

#185002

Postby IanTHughes » December 6th, 2018, 9:32 am

What is "FMCG" when it is at home?


Ian

daveh
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Re: Smith (DS) Half Yearly Results

#185006

Postby daveh » December 6th, 2018, 9:40 am

I do hold, looks like the price has been in a down trend this past year as I've just looked and updated the performance for the holding and the return is down from 33% pa in the first half of this year to only 28.9% as of now. I've held since 2008, I sold the right in 2012 (my recollection is that I had insufficient cash available to take them up and decided not to tail swallow), but took up the rights in July (the proceeds are earmarked for the Europac purchase). It has been one of my better performing holding overall both in dividend and capital terms.

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Re: Smith (DS) Half Yearly Results

#185015

Postby magsy12 » December 6th, 2018, 10:17 am

Fast moving consumer goods.

dspp
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Re: Smith (DS) Half Yearly Results

#185018

Postby dspp » December 6th, 2018, 10:22 am

magsy12 wrote:Fast moving consumer goods.


Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are products that are sold quickly and at a relatively low cost. Examples include non-durable goods such as packaged foods, beverages, toiletries, over-the-counter drugs, and other consumables.[1][2]

Many fast moving consumer goods have a short shelf life, either as a result of high consumer demand or as the result of fast deterioration. Some FMCG, such as meats, fruits, vegetables, dairy products, and baked goods are highly perishable. Other goods, such as pre-packaged foods, soft drinks, candies, and toiletries have high turnover rates. Sales are sometimes influenced by holiday and/or seasonal periods.

Packaging is critical for FMCG. To become successful in highly dynamic and innovative FMCG segment, a company not only has to be acquainted with the consumer, brands, and logistics, but also it has to have a sound understanding and knowledge of packaging and promoting[3]. Logistics and distribution systems often require secondary and tertiary packaging to maximize efficiency. Unit or primary packaging protects products and shelf life while providing product information to consumers.


wiki https://en.wikipedia.org/wiki/Fast-movi ... umer_goods

IanTHughes
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Re: Smith (DS) Half Yearly Results

#185022

Postby IanTHughes » December 6th, 2018, 10:29 am

magsy12 wrote:Fast moving consumer goods.

WWHKT


Ian

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Re: Smith (DS) Half Yearly Results

#185025

Postby Bouleversee » December 6th, 2018, 10:41 am

I don't think anyone has mentioned that they are looking for a buyer for their plastics division which hasn't been doing too well.

https://uk.reuters.com/article/uk-ds-sm ... KKBN1O50KR

Something tells me there may not be too many queuing up to buy. Hope it won't be RPC which I hold through a t/o of BPI and is dropping like a stone, one potential bidder having withdrawn and the other not yet put in an offer.

Arborbridge
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Re: Smith (DS) Half Yearly Results

#185064

Postby Arborbridge » December 6th, 2018, 12:21 pm

IanTHughes wrote:What is "FMCG" when it is at home?


Ian


My own question too! I've never heard of that one. I read newspapers and magazines, look at blogs and social media, watch TV, but it's a new one on me.

Jargon: "special words or expressions used by a profession or group that are difficult for others to understand."

Typically used by the priesthood to maintain apparent superiority over lay members, instead of transparent language which would reduced their advantage.

Gengulphus
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Re: Smith (DS) Half Yearly Results

#185110

Postby Gengulphus » December 6th, 2018, 2:33 pm

magsy12 wrote:Fast moving consumer goods.

Which of course means pizzas, etc, that flee from those who want to consume them! ;-)

Gengulphus

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Re: Smith (DS) Half Yearly Results

#185114

Postby Wizard » December 6th, 2018, 3:02 pm

idpickering wrote:I don't hold these, and am not tempted by the 4.5% yield on offer, just for the sake of more diversification.

Ian.

With a 4.5% yield (taking your numbers as read) this is not a share that should be of interest as a new purchase or top up given the FTSE100 average of 4.6%, according to the guidelines for this board.

Terry.

johnstevens77
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Re: Smith (DS) Half Yearly Results

#185151

Postby johnstevens77 » December 6th, 2018, 6:01 pm

idpickering wrote:I don't hold these, and am not tempted by the 4.5% yield on offer, just for the sake of more diversification.

Ian.


Thanks for the heads up as usual. I bought in 2006 and it has been well worthwhile, even though I sold two rights issues in that time, the capital is still up almost 3 times purchase cost, the divis haven't done too badly either, just one hiccup during the last financial crash. Do look at dspp's posts.

john


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