Car factories fell silent during the lockdown, hitting demand for cardboard packaging of parts
(Picture: Andrew Matthews/PA Archive/PA Images)Coronavirus has produced swings and roundabouts for cardboard packaging group DS Smith, as demand from the likes of Amazon for home shopping boxes surged while orders from factories plummeted.
Today it told shareholders that packaging for the catering and groceries trade, as well as e-commerce, was more than offsetting its industrial sector’s woes.
Chief executive Miles Roberts said: “I am pleased with the performance of the group in the first half of the year, in what remains a difficult and uncertain economic environment caused by Covid.”
Demand from European car-makers has been particularly weak due to lockdowns and driving bans. Catering industry boxes in Spain fell hard due to low numbers of tourists at hotels and restaurants.
Ahead of its half-year profit announcement due soon, the company said earnings would be lower than a year ago although the second quarter was stronger than the first.
The price of old cardboard that goes into DS Smith’s recyled boxes has begun to fall after peaking at the height of lockdown and causing a spike in its overheads.
The falling price was caused by big cardboard users such as shops and offices being shut across Europe. While some of the packaging was displaced to people’s homes as they ordered online, far less is recycled from households than businesses.
This is because card and paper from houses is often contaminated with food or other waste that is difficult to clean, so ends up being incinerated.
So, the reopening of business added volume of old cardboard and dropped prices.
DS Smith also sells paper, and had benefited from a recent rise in paper prices as the Chinese economy began growing again.
