It was with a sense of dread that I headed out for lunch with the boss of a FTSE-100 packaging company. Cardboard boxes; what on earth could be interesting in that? Even the corporate name is boring: “DS Smith.”
Then, into the restaurant bounces Miles Roberts. All lean physique, cheekbones and Sarf London twang, his rapid-fire wisecracks remind you as much of a TV football pundit as a CEO.
In our two hours together, he races through topics from Brexit, to Crystal Palace, to the meaning of life.
He’s not as boring as you’d expect. And nor, when you think about it, is the humble box.
If you’ve ever bought an iPhone you know what I mean. Think of that excitement when you open the packaging; the delicious resistance the lid gives as you slide it up. The way it makes you work, just a little, to gain entry to the sexy white world of Apple inside.
Sure, it’s a box, but it’s so much more.
Of the 20 billion boxes a year DS Smith makes, around 80% are for the food and drinks industry, with most of the rest going to manufacturers. One rule though — no plastic. Following a recent disposal, DS Smith only makes boxes out of cardboard.
Investors fret about the impact of the US-China trade wars, fearing they will hit Roberts’ industrials business. Its shares fell 7% yesterday despite it reporting record half-year profits and margins. Exasperating? “We just have to keep delivering the numbers,” he sighs.
There’s plenty to be positive about. The explosion in online shopping has been a huge boon as DS Smith supplies the delivery boxes. Its UK e-commerce sales are up 40% on last year.
Roberts remembers its early days: “I went to see this company selling books online a long time ago and thought: ‘Hmm, these guys might just be onto something.’” It was, of course, Amazon. DS Smith has been working with it ever since.
Packaging is a commodity and it’s subject to the vagaries of global paper and pulp prices. Hence, Roberts has been making moves to build extra technology into his products, enabling him to charge more and win more clients.
“This is just the first generation; there will be so much innovation from here. We’re doing more and more rightsizing, (customising boxes to take out the unnecessary gaps), product protection inside the packaging, and personalising packaging to Jim,” Me? “Yes, you. We can print on the outside: ‘Hi, Jim, you bought some shirts from us six months ago, they must be looking a bit shabby by now, why not buy some more — they’re on offer again…”
Clever. There are other ways Roberts is, sorry, thinking outside the box.
DS can print the whole package in the end-customer’s favourite colour: “It’s important,” says Roberts. “With e-commerce, that whole ‘first moment’ when you interact with the product is no longer in a fancy store with music and a young assistant saying: ‘oh, this is the one for you sir.’ You’re on your own, in your bedroom. So how it’s presented really matters.”
He has that messianic zeal you see in most CEOs. But he wasn’t always that way. The Streatham lad left school at 16 and drifted into dreary jobs in Croydon (factory worker, plasterers’ apprentice). His mum and dad, a civil servant and academic, were exasperated, but it was an ex-girlfriend’s father who finally niggled him into action. “He said to me: ‘What the bloody hell are you doing? Stop wasting your time. Get some qualifications and do something.’ So I did. I wasn’t so keen on the girlfriend, but she had a very, very good father.”
After A-levels at night school, he took engineering as a mature student at Bristol then got a job at Arup. He trained as an accountant before heading back into construction at Trafalgar House and Générale des Eaux in Paris. Returning to London, he became finance director at Costain, then CEO of cleaning products maker McBride. The call to come and run DS Smith came nine and a half years ago.
There’s a nice symmetry in it: for all his travels, his office in Portland Place now overlooks his grandparents’ flat where he’d often stay as a little boy.
There’s a circularity, too, in DS Smith’s business model. It makes the boxes, sends them out to the customers, then recycles them back into new ones when they’ve finished with them.
But it can only do this efficiently, Roberts says, if we civilians start recycling our trash properly. Separate the food waste from the box, divide out our plastic, keep it all away from the glass. “They do it in Stuttgart, why not here?” he says. We do in some places, I counter. “Yes but it’s so random. Why not have one, uniform recycling policy across the country, instead of 180?”
His other bugbear is Brexit: “We’re seeing manufacturers close, move away, and they all use packaging. They’re our customers. Nobody wants to invest because nobody knows what the future trade agreements are going to be.
“Manufacturers are saying, if we do Brexit, how many years is it going to take to understand what the future trade relationship is? On all products. And if it’s not clear, we fear they will continue to reduce investment in manufacturing in the UK.”
It’s bad for DS Smith, but bad, too, for the country, or as he puts it: “Real people with real jobs making real products, with real families who need an income.”
Tariffs, regulatory alignment, frictionless borders, could easily take 10 years to sort out after Boris “gets Brexit done”, he says.
Asked how he’ll be voting next week, he ducks. What he does give, though, is: “As far as we’re concerned as a business, the only political party right now that is clear about what it wants is the LibDems.” A rare endorsement indeed. Expect that quote to land on your doormat under a picture of leader Jo Swinson this weekend.
The lack of business investment since the referendum is reflected in DS Smith’s spending. Roberts says since that vote he has invested £4.5 billion in capital expenditure and takeovers. Out of that, the UK’s share was only £30 million.
How much would that have been without Brexit? “Considerably more,” he says. Instead, he’s been buying businesses in Spain and the US, and spending the usual £300 million or so on capital investment.
We’ve been talking so long, the restaurant staff are clearing up by the time we leave. Empty boxes from the kitchen pile up in the street. A positive sign, surely. In our consumerist society, life will never be all that bad for DS Smith.