Pre-close Trading Update

Smith (DS) PLC
12 October 2006




                                                                12 October 2006





                     DS SMITH PLC PRE-CLOSE TRADING UPDATE



In accordance with its established practice, DS Smith Plc, the international
packaging manufacturer and office products wholesaler, today issues the
following trading update ahead of its interim results announcement for the half
year to 31 October 2006, which will be made on 6 December 2006.



Group

As previously indicated, profits in the first half of 2006/07 will be
significantly lower than in the first half of 2005/06 due to both high input
costs within Packaging and stronger competition in UK Office Products
Wholesaling.  The strategic and operational actions we are taking across the
Group, combined with the better pricing environment in the paper and corrugated
packaging market, will result in an improving trend in the second half of the
financial year.  The outlook for the full year remains unchanged from that
stated in the September AGM trading update.



Paper and Corrugated Packaging

Margins in both our UK and Continental European Paper and Corrugated Packaging
segments have been squeezed in the first half of the financial year by increased
input costs.  The net cost of waste paper, the principal raw material for our UK
Paper operations, continued to rise due to demand from Asia and a fall in the
value of Paper Packaging Recovery Notes, which are currently trading at below £5
/tonne compared with £14/tonne a year ago.  The Group's underlying energy costs
in the first half of 2006/07 are expected to be approximately £8 million higher
year-on-year, principally due to higher gas prices and the expiry in October
2005 of the Group's favourable fixed price UK electricity contract.  There is
some easing in market energy prices but the benefits of this will be largely
offset in the short-term by the effects of lagged energy price increases in the
contracts for some of the Group's operations.  The outlook for the Group's
energy costs for the full year remains broadly unchanged.

Stronger demand, combined with substantial reductions in industry capacity for
recycled corrugated case material (CCM), has resulted in an improving supply and
demand balance and a firmer pricing environment in both CCM and corrugated
boxes.  In August, we successfully implemented another CCM price increase and in
September implemented further increases in box prices in both the UK and
continental Europe.  The box price increase programme is ongoing.

In August, we announced another important strategic step towards raising the
returns of the Group's Paper operations through the proposed closure of Taplow
Mill and the sale of the Taplow site which realised a substantial net cash
benefit.  The Mill will cease production by the end of October, further reducing
the Group's reliance on commodity CCM.


Plastic Packaging

In Plastic Packaging, the improving trend of results in the second half of 2005/
06 has continued in the first half of 2006/07.  Sales volumes have increased,
particularly in the beverage crate business and results have benefited from the
actions taken previously to lower costs and strengthen product development.



Office Products Wholesaling

As previously indicated, Spicers' results in the first half of 2006/07 will be
significantly lower than in the same period last year due to stronger
competition and higher operating costs in the UK.  An extensive programme is
under way in Spicers UK to improve the sales mix on the back of raised service
levels and to lower costs.  We expect to see the initial benefits of this
programme in the second half of the financial year.  Spicers' continental
European businesses continue to perform satisfactorily.




Enquiries


DS Smith Plc                                                    020 7932 5000
Tony Thorne, Group Chief Executive
Gavin Morris, Group Finance Director
Peter Aubusson, Group Communications Manager

Financial Dynamics                                              020 7269 7121
Richard Mountain/Susanne Walker




A conference call for analysts and investors, hosted by Tony Thorne and Gavin
Morris, will take place today (12 October) at 9.00am BST.  The dial-in numbers
are:

UK participants: 0845 634 0047
International participants: [phone]
Alternative back-up number: [phone]



A recording of this conference call will be available by telephone from one hour
after the call has ended until 17.00 BST on 19/10/06.  The dial-in numbers for
this recording are:

UK callers: 020 7769 6425
International callers: [phone]
Replay security code: 753312#



A recording will also be available through the Investor Relations section of our
website: www.dssmith.uk.com from 14.00 BST today.








                      This information is provided by RNS
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