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Consumer goods and e-commerce boost cardboard maker DS Smith

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·2-min read
FILE PHOTO: The logo DS Smith is pictured inside the carboard box manufacturing company DS Smith Packaging Atlantique in La Chevroliere
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(Reuters) -Cardboard maker DS Smith delivered an 80% surge in first-half profit and a higher dividend on Thursday, helped by strong demand from consumer goods makers and the e-commerce market.

The London-based company, which provides packaging, paper and recycling services, has navigated pandemic-led disruptions by tapping growing demand for recyclable boxes while also benefiting from the boom in online shopping.

Pretax profit at DS Smith, whose customers include Amazon, Nestle and Unilever, rose to 175 million pounds ($231 million) in the six months ended Oct. 31, from 97 million pounds a year earlier.

"We are continuing to benefit from a very dynamic market with demand for packaging for different retail solutions evolving rapidly ... Our supply chains have remained secure and the significant increases in input costs have been mitigated," Chief Executive Miles Roberts said in a statement, referring to higher prices for, for example, logistics and paper.

DS Smith shares were up about 3% in early trading.

Results were bolstered by strong growth in vaccine-advanced markets like the United States and Southern Europe, where the company also recently invested in developing more sites to process cardboard and paper demand.

The company increased its interim dividend by 20% to 4.8 pence per share, and said it was confident about delivering a "significant improvement" in profitability during the second half of the fiscal year, in line with its expectations.

"We think the company is managing the extreme cost pressure well, and see the lack of any downgrades to expectations as a positive," JP Morgan analysts said in a note, lifting their target price on the stock by 4 pence to 588 pence.

First-half revenue rose 16% to 3.36 billion pounds, with box volumes up 9.4%.

($1 = 0.7572 pounds)

(Reporting by Chris Peters and Pushkala Aripaka in Bengaluru Editing by Sriraj Kalluvila and Mark Potter)

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