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DS Smith expects more savings from SCA acquisition

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DS Smith expects more savings from SCA acquisition

DS Smith expects more savings from SCA acquisition
October 12
13:34 2012

Corrugated and paper giant DS Smith has announced that it will save more from its acquisition of the recycled packaging business of SCA than previously though

The firm issued a statement about its first 100 days of ownership of SCA Packaging this morning (11 October).

The company bought the SCA business for €1.6bn in June to expand its footprint across northern Europe and the Nordic area, where its consumer goods customers such as P&G, Nestle, Reckitt Benckiser and Unilever operate.

DS Smith expects to save €100m a year ($129.02m) in costs after three years of ownership.

In a statement, the company said that it was pleased to report that the integration was proceeding well, “with good progress across all areas”.

It had earlier expected to save €75m a year.

The company said it will have working capital and capital expenditure savings of €130m, up from the €40m expected earlier.

With more savings the company expects to reduce its net debt/EBITDA ratio to at least two by April 30, a year ahead of plan.

‘Two strong packaging businesses’

Miles Roberts, group chief executive, said: “Six months ago DS Smith and SCA Packaging were already two strong packaging businesses, neither of which could reach its full potential on its own.

“The improved synergies that we have been able to announce today show how the new enlarged group is not just bigger, but far stronger. Our customers and our employees have responded enthusiastically to the opportunities opened up by the new scale of our business and the scope for further improvement.

“We are firmly on the right path. With a truly pan-European footprint, and a management team that combines the best of both businesses, we are well placed to drive growth in the FMCG sector in what remains a challenging economic environment.

“At the same time we will continue to perform for our shareholders through delivering the greater synergies we have identified, and further improving our business mix. As a consequence, we expect to deliver a return on this investment above our cost of capital in this financial year, together with substantial earnings enhancement.”

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