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DS Smith profit jumps, looking to sell plastics division

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By Reuters

(Reuters) – Packaging company DS Smith Plc <SMDS.L> on Thursday reported a 32 percent jump in first-half adjusted operating profit as it sold more boxes at higher prices, and said it was exploring options for a potential sale of its plastics division.

The company said its board concluded that the unit is an attractive asset with good growth prospects. Three sources had told Reuters in October that a deal could be worth around $800 million (630 million pounds).

DS Smith said sales at the plastics division, which makes up 6 percent of total revenue, rose 2 percent for the first half, adding that higher polymer prices and the lag in price recovery had hurt short-term profitability.

The company has been raising prices for its boxes to improve margins and offset higher pulp and paper costs. It supplies recyclable packaging material to companies including Inc <AMZN.O>, British fashion chain Next Plc <NXT.L> and for brands such as Aldi, Tesco, Primark, Auchan and IKEA.

Adjusted operating profit from continuing operations rose to 304 million pounds for the six months to Oct. 31, from 231 million pounds a year earlier, the FTSE-100 firm said.

The acquisitions it made in North America helped add 32 million pounds to its profit. The 80-year old company entered the United States last year with an 80 percent stake buy in Interstate Resources for $920 million.

(Reporting by Shashwat Awasthi and Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr)