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DS Smith (SMDS) Shares Have Fallen 13% in a Week. What’s Next?

Simon Mugo trader
Updated 23 Jun 2023

The DS Smith plc (LON: SMDS) share price has fallen 12.52% in the past week despite releasing upbeat full-year financial results for the 12 months that ended 30 April 2023. The company revealed that demand for its packaging products had declined substantially, triggering the selloff.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Still, despite the lower demand for its products, DS Smith reported improved revenues of £8,221 million, marking an 11% increase from the previous year’s figures. The company attributed its higher revenues to the higher prices of its products despite the lower demand.

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The company made an operating profit of £861 million, marking a 35% improvement from the previous year in constant currency. The company’s profit before tax was £661 million, marking a 71% improvement in constant currency terms. 

The upbeat revenues and profit figures did little to save the company’s share price from falling as investors remained fearful about the price increases. The price hikes implemented by DS Smith to protect and improve its profit margins could drive a further decline in the demand for its packaging products. 

DS Smith also admitted that cost-cutting measures implemented by the company drove its upbeat figures and that some of its price hikes were based on value addition; hence, they were not just arbitrary price hikes. 

The company also noted that it had made good progress in replacing plastic in its packaging materials, having replaced 762 million units of plastic since 2020 and 297 million in the 2022/23 financial year. 

The packaging company also generated decent free cash flows of £354 million, which helped it reduce its leverage to 1.3x net debt/EBITDA compared to last year’s 1.6x ratio. 

Miles Roberts, DS Smith’s Group CEO, commented: “The performance of the business during the year has been excellent, despite the challenging economic environment, and I am extremely proud of all our colleagues for their dedication and support. We have had an unremitting focus on meeting our customers' rapidly changing needs with new innovation. This, together with high levels of service and our sustainability performance, has been rewarded through market share gains during the period.”

*This is not investment advice. 

DS Smith share price. 

The DS Smith share price has fallen 12.52% in a week. Here’s why.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading