DS Smith expands in Spain as profits soar
DS Smith is expanding its market share in Spain after agreeing to buy Spanish company Grupo Lantero’s corrugated products business.
The recyclable corrugated packaging provider said the €190 million purchase, including assumed debt, would deliver a return on invested capital in the second year of ownership.
The move comes as the company annouced its full year results. It reported a pre-tax profit of £200m for the year ended 30 April, up 20%. Revenue fell by 5% to £3.8bn mainly due to the impact of the weaker euro. Dividend per share was up 14% to 11.4p.
Miles Roberts (pic), chief executive of DS Smith said: “The progress in the business with customers is evidenced by accelerating volume growth, together increased margins and returns, from our unique and enhanced offering.”
DS Smith said the acquisition of Grupo Lantero, which includes several operations in which it currently holds a minority interest, would give it an about 10% share of the Spanish cardboard corrugated packaging market.
“This acquisition significantly strengthens our operations in Spain, an important and growing market for corrugated packaging,” the company said in a statement.
Grupo Lantero’s corrugated products business has a strong focus on the FMCG sector and operates out of seven sites across Spain.
The Grupo Lantero purchase follows DS Smith’s acquisition of Spanish corrugated board producer Andopak for £35m in 2014.
Roberts added: “We are delighted to announce the acquisition of the corrugated activities of Grupo Lantero. It is a high quality business that we have known and partnered with for a number of years and significantly increases our offering to Pan-European customers in this large and growing market. It is a further important step in our strategy to leverage our scale and strengthen our geographic footprint and we look forward to working with Grupo Lantero stakeholders and contributing to the overall growth of DS Smith.”
The company also said strong volume growth and a rise in margins had prompted it to increase its medium-term margin target by 100 basis points.