Trading Update

Smith (DS) PLC
05 September 2005



5 September 2005


                    DS SMITH AGM TRADING UPDATE STATEMENT


DS Smith Plc, the international packaging manufacturer and office products
wholesaler, is today advancing the release of the following statement that will
be made at its Annual General Meeting on 7 September 2005.


In financial year 2004/05, DS Smith produced a commendable result despite
further weakening in the paper market and sharply higher energy and polymer
costs.  We were pleased to report further progress in Corrugated Packaging,
thanks both to higher profits in our existing business and to the substantial
contribution from our first full year of ownership of the former Linpac
Containers business.  The Spicers Office Products business continued to advance,
helped by moving into profit in Germany.


We stated at the time of our 2004/05 Preliminary Results in June that the
trading environment was difficult and that energy and other input costs were at
considerably higher levels than in 2004/05.  Energy costs have continued to rise
and we now anticipate that the increase in our energy and fuel costs for 2005/06
will be approximately twice the level of the minimum increase of £9 million we
indicated in June.  This increase is particularly affecting results in Paper and
Corrugated Packaging, where approximately 90% of the Group's energy and fuel
costs are incurred.  In this segment, our continuing drive for operational
improvement is expected to mitigate part of this further increase in energy
costs.


In Paper and Corrugated Packaging, the lower box demand and European
overcapacity in corrugated case materials (CCM) continues to put pressure on
selling prices and margins throughout the supply chain.  In our case we have the
benefits from the integration of Linpac Containers.  The restructuring of our
enlarged Corrugated Packaging operations, begun in autumn 2004, continues and we
remain confident of achieving the synergy benefits in the timescale previously
indicated.  Our UK Paper business has reduced its emphasis on CCM through
growing sales of higher added-value plasterboard liner to an annual run-rate of
over 130,000 tonnes.  A number of our competitors have recently announced
restructuring and capacity reduction plans to address the effects of the poor
market conditions.


In Plastic Packaging, polymer prices have fallen back from their peak but they
are still at higher levels than in recent years.  They may start to increase
again following the recent rise in oil prices but the outlook is uncertain.  Our
sales have been slow in the opening months of the year and competitive pressures
have further lowered our margins.  The division's profits, which were £6.6
million in the first half of 2004/05 fell to £3.3 million in the second half of
2004/05, principally as a result of the higher polymer costs.  For 2005/06, full
year profits are now expected to reflect this half-yearly run-rate.  Our forward
order book is strengthening, in part as a result of developing new products and
new outlets, while the restructuring of our European liquid packaging and
dispensing operations will reduce costs.


In Spicers' established UK and French businesses, the gradual improvement in our
sales which began in 2004/05, has continued, although as previously indicated,
prices remain under pressure, particularly in electronic office supplies.  The
developing businesses in continental Europe continue to make progress.


In July, we concluded the sale of the John Dickinson office products
manufacturing business to Groupe Hamelin.


In summary, the extraordinary rise in energy costs is proving harder to mitigate
than we anticipated in June, given the prevailing market conditions.  This is
despite the considerable benefits we are realising from our enlarged Corrugated
Packaging operations.  For the reasons identified above, we now anticipate that
our result for the year to 30 April 2006 will be below our expectations at the
time of the 2004/05 Preliminary Results in June.  We are taking action to
address this situation by further cost reduction and continued active management
of prices, while maintaining our commitment to generating strong free cash flow.


DS Smith will publish information about the restatement of its results for
financial year 2004/05, as prepared under International Financial Reporting
Standards, on 13 October 2005.  At the same time, a trading update will be
provided, as is our normal practice, prior to the close of the first half of the
financial year.


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 7291

Richard Mountain/Robert Gurner



A conference call for analysts and investors, hosted by Tony Thorne and Gavin
Morris, will take place today at 8.30am 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 for one week from
approximately 12.30pm BST today.  The dial-in numbers for the recording are:

UK callers - 020 7769 6425

International callers - [phone]

Security code for the replay - 567361#



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