25th Feb 2016 11:54
LONDON (Alliance News) - Anglo-South African paper and packaging company Mondi PLC hiked its 2015 dividend on Thursday after profit surged thanks to strong trading across its divisions and it outlined plans to make further investments to drive operational efficiencies in 2016.
The FTSE 100- company said pretax profit for the year to the end of December rose to GBP796.0 million from GBP619.0 million a year earlier, as revenue grew 7.0% to GBP6.82 billion from GBP6.40 billion. The group will pay a final dividend of 37.62 euro cents per share, taking its total dividend to 52.0 cents, up 24% year-on-year.
Pretax profit was slightly weaker than consensus estimates for EUR832.0 million, though still substantially higher year-on-year. Revenue also came in slightly short against forecasts for EUR6.90 billion.
Revenue was pushed higher by generally higher domestic selling prices for the groups within Mondi's upstream paper businesses and good volume gains made in its containerboard, corrugated packaging and consumer packaging units.
Packaging paper was again a strong performer for Mondi, supported by higher selling prices and volume growth, while the fibre packaging division benefited from better gross margins. Consumer packaging remains robust, with volume and margin expansion, while uncoated fine paper was helped by higher selling prices and benefits from investments made in the business flowing through.
Mondi said all its business units performed well over the course of the year and said it intends to spend EUR450.0 million on internal projects in 2016, part of a push to increase the efficiency of its operations. In 2016, the group will carry out work on its Steti mill in the Czech Republic to increase efficiency at the operation and will install a new kraft paper machine as its central European operations in order to increase capacity.
Speaking at the UBS European Conference in late 2015, Mondi Chief Financial Officer Andrew King said internal capital projects would be a key earnings driver for Mondi in 2016.
In 2015, Mondi bought EUR94.0 million worth of bolt-on companies, focused on boosting its consumer packaging exposure, while it also closed six operations and sold another four in order to cut costs and refine its product mix.
"2015 was an extremely successful year for Mondi. We made significant progress across a number of key areas and again delivered excellent results. Our focus continues to be on growing the packaging side of our business while at the same time investing appropriately in our uncoated fine paper operations," said Chief Executive David Hathorn.
Hathorn said the outlook for Mondi remains positive. Though it has seen some softness in certain packaging paper grades, firmer prices are being seen for European uncoated fine paper following recent capacity reduction in the industry.
In addition to this, Hathorn said lower energy and related input costs, the generally positive impact of weaker emerging market currencies on Mondi's costs, and the contribution it will see from its capital projects should benefit its near-term performance.
"Underpinned by the group's robust business model, centred around our high-quality, low-cost asset base, clear strategic focus and culture of continuous improvement, we remain confident of continuing to deliver an industry-leading performance," he said.
On Thursday, Mondi added it has agreed a deal to sell its Neusiedler uncoated fine paper operations in Austria to a joint venture subsidiary, Mondi SCP.
Mondi owns 51% of the SCP business, with the rest owned by Eco-Invest AS, and the unit owned its uncoated fine paper mill in Slovakia.
SCP will pay Mondi EUR30.0 million in cash to buy the operation and Mondi's ownership of the Neusielder business will effectively be cut to 51%.
Mondi shares were up 1.0% to 1,278.00p.
By Sam Unsted; [email protected]; @SamUAtAlliance
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