International Paper: Initial guidance for DS Smith ahead of JPMe. CMD to provide more colour on a path to its targets

DS Smith is set to host its CMD today in London. Ahead of the event, DS Smith has laid out some key financial targets, with the majority provided on a non-IFRS basis. EBITDA: DS Smith guided for FY26 EBITDA of EUR730-780m (USD820-875m) versus our estimate of USD829m; over the medium term it targets margins of 「mid-teens」 versus JPMe of 11% in 2028, core to which is EUR480m of annualised cost savings expected to be achieved on a run-rate basis by the end of 2027, versus aggregate cost savings of EUR200m in FY26. Capex and FCF: FY26 capex is guided at EUR550-570m (USD620-640m vs JPMe of USD600m); over the medium term DS Smith targets capex to revenue of about 6.0% versus JPMe of 6.2%, implying capex of about EUR520m (USD580m) annually; FCF as a percentage of EBITDA can trend towards the mid-30s, with a dividend of about 30-50% of adjusted EPS. Debt: FY26 net debt/EBITDA guidance of 2.3-2.5x at the mid-point (implying net debt of about USD2.0bn or EUR1.8bn), with a medium-term aim of 1.5-