DS Smith is targeting annualised cost savings of approximately €480m through a major restructuring of its European packaging operations, with around 15% of its packaging sites earmarked for closure.
The plans were outlined at a Capital Markets Day in London on 3 November by the future leadership team of DS Smith, which is preparing to separate from parent company International Paper and become an independent listed business.
The programme involves consolidating production into fewer, “more efficient” facilities, alongside organisational restructuring and reductions in procurement costs. Production volumes are expected to be largely maintained through transfers between sites.
UK changes
Providing an update on the UK operation, managing director James Lomax said five factories had closed over the previous 12 months, with a sixth expected to close before the end of 2026.
He said the changes had involved transferring approximately 200 million square metres of production volume between UK sites and installing 15 assets to accommodate the work.
Lomax said the UK restructuring was driven by the need to address the business’s structural cost base and improve productivity and long-term competitiveness.
The changes form part of a wider programme across the combined EMEA packaging business, which operates in 29 countries and has a network of 14 paper mills and approximately 180 packaging sites.
DS Smith also announced in September proposals to close Paper Machine 4 at its Kemsley mill in Kent, alongside a proposed investment of approximately £20m in Paper Machine 6. The proposals are subject to consultation with employee representatives.
Savings target
The wider restructuring is expected to deliver approximately €480m in annualised initial cost savings, equivalent to around 14% of operating costs.
The majority of the savings are expected to be achieved on a run-rate basis by the end of 2027, with approximately €200m anticipated during 2026.
The programme includes consolidating packaging volumes into fewer sites, removing peripheral activities and streamlining the organisational structure.
The company said around 13% of packaging production volumes would be transferred between facilities, with the receiving sites expected to accommodate the work.
Future plans
The company said its large-scale investment programme to upgrade its paper mill portfolio was largely complete, with improvements to mill performance expected to provide greater flexibility for future investment.
For 2026, DS Smith is forecasting adjusted EBITDA of between €730m and €780m, with capital expenditure expected to reach €550m to €570m.
The planned separation from International Paper remains on track to be completed within or ahead of the original 12-to-15-month timetable announced in January 2026.
Portfolio
DS Smith has more than 20 manufacturing and technical sites across the UK and Ireland, including its major recycled paper mill at Kemsley in Kent, as well as packaging manufacturing facilities in locations including Belper in Derbyshire, Burscough in Lancashire, Devizes in Wiltshire, Fordham in Suffolk, Launceston in Cornwall and Lockerbie in Dumfries and Galloway.
The UK operation has already undergone significant restructuring. Five packaging plants in Clay Cross, Plymouth, Newcastle, Sheerness and Wellingborough were closed following a review announced in 2025. More recently, DS Smith confirmed the closure of its Launceston factory in Cornwall, affecting 165 jobs, with production due to end in November 2026. The company has also proposed closing Paper Machine 4 at its Kemsley mill in Kent.