DS Smith in profits warning

Shares in DS Smith tumbled yesterday after the packaging and office products supplier blamed high energy costs and lower margins for the warning that profit "will be somewhat below our expectations".

The shares fell 22p to 144.5p, a result that will have unnerved several leading City institutions including Credit Suisse, Henderson and M&G - the biggest shareholders.

DS Smith also warned that it will take exceptional charges of £43m in the year as it accelerates plans to streamline the business.

The good news in the statement was that earnings per share before such exceptionals should be in line with forecasts due to a lower than expected tax bill.

Goldman Sachs estimates that profits for 2005/06 will be just above £55m. Given the fall in the share price, the investment bank claims that there is not much "downside" left for the stock.

DS Smith employs 11,000 people across the world, 7,000 of which are in the UK.