Mondi increases dividend despite a dip in earnings


Mondi increases dividend despite a dip in earnings


Published Date: 2020-02-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mondi increases dividend despite a dip in earnings

The paper and packaging group says it remains highly cash generative and is seeing evidence of pricing stability in certain segments.

Mondi says the markets it operates in continue to face macroeconomic uncertainties, resulting in lower average selling prices. Sales volumes have also declined, primarily due to longer planned maintenance shuts at its factories and initiatives it's taken to restructure its operations. Still, the paper and packaging group has raised its 2019 dividend despite a decline in earnings.

The group says strong performances from its flexible packaging and engineered materials operations last year help to mitigate the margin pressures in corrugated packaging and uncoated fine paper in the face of market driven price decreases. Input costs were higher for the year as a whole, although they eased in the second six months.

Revenue declined by 3% to €7.27 billion in the year to end-December and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 6% to €1.66 billion. Profit before tax was steady at €1.1 billion. Basic earnings per share (EPS), which exclude special items, fell 1% to 167.6 euro cents, while underlying EPS dropped 10% to 171.1c. It's raised its total dividend by 9% to 83c per share.

Mondi said planned maintenance costs impacted EBITDA by around €150 million, with a further €100 million pencilled in for this year.

Apart from remaining strongly cash generative and reducing its debt, the group said it was confident in the structural growth drivers in the packaging sectors it operated in.

Mondi's shares rose 2% to R320.22 yesterday.


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