Mondi wraps up a bumper first half

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Mondi wraps up a bumper first half

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Published Date: 2018-08-06 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mondi wraps up a bumper first half

The paper and packaging group has benefited from strong demand and rising prices as more consumers go online

Online shopping and the shift to more environmentally-friendly packaging are proving a boon for Mondi. The paper and packaging group has delivered a strong set of interim results, with higher selling prices that more than offset rising operating costs and the impact of maintenance shutdowns.

Mondi says it's benefited from good demand across its range of speciality kraft papers in Europe, supported by the drive to replace plastic carrier bags with paper-based alternatives. Average benchmark European selling prices for unbleached kraftliner were up 24% on a year earlier, while average benchmark European selling prices for recycled containerboard were up 18% on the first half of 2017. Containerboard is used to make corrugated cardboard boxes and packaging, which are in increasing demand as more customers go online for their shopping.

The company said all operations across the pulp and paper business delivered a strong operational performance, with the exception of its Richards Bay mill due to an extended maintenance shutdown. It says its €750 million capital expenditure programme is helping secure future growth and ensuring that its operations remain cost competitive. This will contribute to earnings next year, with the modernisation of its kraft paper factory in Steti in the Czech Republic on track to start-up later this year and an upgrade at its Ruzomberok pulp mill in Slovakia commencing.

Revenue rose 4% to €3.73 billion in the six months through June, while underlying earnings before interest, tax, depreciation and amortisation jumped 17% to €852 million, with a margin of 22.9%. Basic underlying earnings rose 26% to 89.2 euro cents. It's declared an interim dividend of 21.45 euro cents.

The increase in profit came despite a weaker US dollar and Russian rouble over the period and higher raw material costs.

Mondi says the trading environment remains positive going into the second half of the year, with pricing in key fibre-based product segments remaining supportive.

Mondi Limited shares rose 5.9% to R383.48 on Friday while Mondi Plc added 6.5% to R383.90.





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