16th Oct 2014 06:44
LONDON (Alliance News) - Packaging and paper company Mondi PLC Thursday reported an underlying operating profit of EUR174 million for the third quarter, broadly flat on the year and in line with management expectations, but said it had successfully raised prices for some products which should help support the business going forward.
In a statement, the company said its like-for-like sales volumes were broadly in line with the third quarter of 2013.
However, it said it "successfully" implemented the price increases it previously announced in a number of its key packaging paper markets, including unbleached kraft paper from the beginning of the third quarter, recycled containerboard from August and unbleached kraftliner from September.
It also said wood costs were lower on average than in the second quarter, while paper recycling costs were at similar levels.
Mondi's third quarter underlying operating profit is 10% below the figure it reported for the second quarter, and Mondi said annual maintenance shuts scheduled for its uncoated fine paper and containerboard facilities, completed to plan, had knocked about EUR30 million off its third quarter profit.
It is doing maintenance on its major kraft paper facilities in the fourth quarter, and expects a EUR15 million to EUR20 million operating profit hit from those maintenance shuts based on current product prices.
Mondi said the developments in Ukraine and Russia have had "minimal direct impact" on its operations so far.
It said its South Africa division benefited from the stronger US dollar on its export sales, whilst the weaker Russian rouble had a negative impact on the more domestically focused Russian businesses. The recent strengthening of the US dollar relative to the euro should support European pricing in packaging grades and provide a net benefit to the group's export businesses, it added.
Mondi said net debt stood at EUR1.81 billion at the end of the third quarter, up EUR60 million from the end of the first half, due to the acquisition of the Printpack Inc. consumer packaging plant in Poland in July for USD23 million, increased capital expenditure, payment of the interim dividend, interest on the 2020 EUR500 million Eurobond and currency movement effects.
"Recent price increases in a number of the Packaging Paper grades and continued strong operating performance across the group should provide solid support for the group to continue to deliver in line with management expectations," the company said in an outlook statement.
"Looking further forward, much depends on macroeconomic developments in the group's core European markets. However, with the group's low cost operating model in upstream businesses, to be further enhanced by the various capital projects nearing completion, and the benefits of strong vertical integration, management remains confident of continuing to deliver industry leading
performance," it added.
Mondi said it is continuing to make good progress on its major capital projects, with the EUR128 million recovery boiler project at the Ruzomberok mill and the EUR30 million pulp dryer at the Syktyvkar mill currently in commissioning phase.
By Steve McGrath; [email protected]; @stevemcgrath1
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