Lockdown online shopping surge boosts DS Smith e-commerce sales

Soaring demand for online retail deliveries amid the coronavirus crisis has helped cardboard box maker DS Smith notch up a surge in e-commerce revenues.

The group said it saw “double-digit” growth in Northern European e-commerce sales by volume over its year to April 30, which included more than a month of lockdown.

It said the pandemic will help drive further demand for packaging as more people work from home, accelerating the shift towards online shopping.

But shares fell 8% as it said overall box sales were knocked by falling demand in the industrial sector during April and May as it was disrupted by the pandemic.

Industrial sales, which were already down by single digits due to wider economic pressures, plummeted around 25% in April followed by similar drops in May and June.

The car and electronics sectors were hardest hit – down around 50% and 25% respectively in April.

DS Smith said it saw a hit to full-year earnings of around £15 million as the crisis weighed on industrial customers and due to rising costs in the final two months of its full year.

Results showed a 5% rise in pre-tax profits to £368 million for the year to April 30, while revenues dipped 2% to £6 billion.

Underlying earnings rose 4% to £660 million.

The group sees fast-moving consumer goods and e-commerce – which account for around 83% of box sales by volume – offering the biggest boost in future, while the push towards sustainable packaging is also driving sales of its corrugated packaging.

Miles Roberts, group chief executive of DS Smith, said: “In the medium term, the growth drivers of e-commerce and sustainability are as strong as ever.

“The Covid-19 crisis is also expected to accelerate a number of the structural drivers for corrugated packaging, and our scale and innovation-led customer offering positions us well and gives us confidence for the future.”

Sophie Lund-Yates, equity Analyst at Hargreaves Lansdown, said: “The packaging giant has significant exposure to fast-moving consumer goods companies, and is an integral part of the machine that keeps goods on our supermarket shelves.

“That means it’s been offered a level of protection in the current downturn, because a certain amount of demand will show up come rain or shine.

“Added to that is an increase in online shopping, which hasn’t just acted as a boost now but is a long-term growth lever for the group.”