Stable input costs help lift Mondi's profit
Mondi sees continued benefit from stable input costs and incremental contributions from its capital investment programme.
|||Johannesburg - Packaging and paper group Mondi yesterday reported an 8 percent increase in underlying operating profit and said it was a result of continued benefit from stable input costs and incremental contributions from its capital investment programme.
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Mondi said underlying operating profit rose to e529 million (R8 billion) for the six months to end June, up from e451m reported last year.
Chief executive David Hathorn said: “We are on track to deliver an anticipated e60m in incremental operating profit in 2016 from recently completed major capital projects, and our projects in development remain on time and on budget. The board recently approved the first phase of a modernisation programme at our Steti mill in the Czech Republic with follow-on investments still under evaluation,” he said.
Profit for the period attributable to shareholders was also higher at e363m, up from e292m reported last year, while headline earnings per share grew to e0.75 per share as compared with e0.601 per share.
However, the group said the revenue decrease to e3.31bn, down from e3.46bn was due to successful disposals completed last year and currency effects.
Hathorn added: “While we saw some price weakness in certain of our packaging grades in the first half, demand for these products remains strong and pricing has stabilised with increases recently achieved in certain grades.”
Strong demand
The board declared an interim dividend of 18.81 euro cents a share and it would be paid from distributable reserves of Mondi Limited and Mondi Plc.
The group said while it saw some price weakness in certain of its packaging grades in the first half, demand for these products remained strong and pricing had generally stabilised with increases recently achieved in certain grades.
Looking ahead Sappi expected the second half to be impacted by planned maintenance shuts at a number of its mills and the usual seasonal downturn in its uncoated fine paper business.
“Furthermore, we anticipate a lower forestry fair value gain than was recognised in the first half. We expect to continue to benefit from stable input costs and incremental contributions from our capital investment programme, together with the stability afforded by our downstream converting businesses.
“While mindful of the heightened macroeconomic and political uncertainties in Europe, we remain confident of continuing to deliver an industry leading performance in line with our expectations.”
Ian Cruickshanks, an independent analyst, said: “Mondi is continuing to make good progress and rewarding the shareholders with higher dividends. The profits they are generating ensure that the company continues to afford to pay the dividends and the overall business is looking very healthy. The company has an ongoing record of producing good results and its diversification strategy is bearing fruit.”
He said Mondi was doing better than its rival, Sappi.
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