DS Smith PLC (£SMDS) - A Valuation on 16th November 2020

A mature packaging business in the right place at the right time. Will they position themselves for the circular economy, or will their competition win the cost-game?

The Company - DS Smith PLC (£SMDS)

DS Smith PLC (£SMDS) is a manufacturer of packaging and corrugated board for the consumer goods, e-commerce, transport and industrial packaging markets. They are also Europe’s largest paper and cardboard recycler. The firm operates primarily in Europe and North America and the fast-moving consumer goods sector (FMCG) accounts for almost ¾ of their packaging volumes. 

The company has benefited from the boom in e-commerce over the last 10 years and has been expanding across Europe and into North America. A combination of organic reinvestment to expand capacity, market-share gains, and large acquisitions - the most recent of which was Europac (a European business with complementary geographies) in January 2019 - has helped the firm continue to grow rapidly and benefit from economies of scale. 

This scale and its growing recycling business have helped the firm become less reliant on pulp and paper prices and further reduce its real cost base. The company ha…