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FY operating profit 701 mln stg vs forecast 654.2 mln stg

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Shares up 1.3% in morning trade

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Company says positive volumes trends continued into new FY

(Adds CEO in paragraphs 4, 5 and 7, analyst in 8, shares in 10)

By Yadarisa Shabong and Aby Jose Koilparambil

June 20 (Reuters) - British paper and packaging company

DS Smith ( DITHF ) posted a smaller than expected fall in annual

profit on Thursday and struck an optimistic tone for the new

financial year on a recovery in demand and prices.

After a surge in sales during pandemic lockdowns on the back

of soaring e-commerce demand, packaging companies had to grapple

with de-stocking by customers, a tough macroeconomic backdrop,

and falling prices.

London-listed DS Smith ( DITHF ), which provides packaging, paper and

recycling services to companies including Amazon ( AMZN ) and

Unilever ( UL ), said the positive trends in packaging volumes

from the second half of its last financial year had continued

into the new one.

"We have seen a number of our big customers, those big

branded FMCG (fast-moving consumer goods) companies, really

start to grow their market share through new product

development, new product launches," CEO Miles Roberts told

Reuters.

"That indicates that the consumer is in a stronger, slightly

more optimistic mood than they were from the start of our last

financial year."

DS Smith ( DITHF ) in April agreed to a $7.20 billion all-share

takeover by International Paper ( IP ). However, the U.S-based

suitor itself became a takeover target after Brazilian pulpmaker

Suzano confirmed last month it was interested in

assets owned by International Paper ( IP ).

Roberts said the speculation related to Suzano and

International Paper ( IP ) had not been a distraction.

Matt Britzman, equity analyst at Hargreaves Lansdown, wrote

in a note that with International Paper ( IP ) subject to its own

takeover speculation, there was reason for DS Smith ( DITHF ) to be

cautious as there "could still be twists in this story".

DS Smith's ( DITHF ) adjusted operating profit from continuing

operations for the year ended April 30 fell 19% year on year to

701 million pounds ($891 million). Analysts on average had

expected a profit of 654.2 million pounds, according to LSEG

data.

Shares in the company were up 1.3% at 356.40 pence in

morning trade.

($1 = 0.7872 pounds)