Trading Update



17October 2008

DS SMITH PLC PRE-CLOSE TRADING UPDATE

DS Smith Plc, the international packagingsupplierand office products wholesaler, today issues the following trading update for the half year ending 31 October 2008.

Group

The overalltradingperformance in the first half of financial year 2008/09 has been broadly in line with our expectations at the time of our Interim Management Statement issued on 3 September 2008. Asreportedpreviously, the Group's operating results are being impacted by lower demand and higher input costs. In both Packaging and Office Products Wholesaling, market demand in the second quarter of the financial year has been weaker and more volatile than in thefirst.

Packaging

Margins in our Paper and Corrugated Packaging businesses continue to be affected bythe weaker market conditionsand higherenergy and raw materialcosts. In theUK, weareimplementinga further price increase for corrugated products to recover the most recentrisesin input costs. The project to commission the lightweightcorrugated case material (CCM)machine at Kemsley Mill in January 2009 remains on schedule. Our continental European corrugated businesses, which are net buyers ofCCM,continue to make progress, assisted by the strength of the euro.

In Plastic Packaging,we have raised prices to recover higher input costs and we are benefiting from the actions taken in liquid packaging and dispensing. However, these factors have been more than offset by the effects oflower sales volumes, particularlyinreturnable transit packaging.

Office Products Wholesaling - Spicers

We have grownour sales stronglydespitea slow-down inthemajor marketswhich we serve. In theUK,we continue to make progress in raising efficiency, thoughthe plannedprofit growth has been affected by ahighlycompetitive environment. On the continent, we havemaintained encouraging progressinourdevelopment businesses.

FinancingFacilities

During the first half, we have successfully extended our financing facilities with the renewal of our 5-year syndicated revolving credit facility of £287.5 million (previously £250 million). This has extended the weighted-average maturity of the Group's committed borrowing facilities to four years and eight months.

Outlook

We continue to expect the Group to achieve a robust performance in 2008/09, despite the level of demand in our markets and trends in input costs.Ourpriority remainstoenforcetight operational discipline,focusing particularlyon operating cash generation.

DS Smith will announce its results for the six months to 31 October 2008 on

3 December 2008.

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