6th Aug 2015 09:04
LONDON (Alliance News) - Anglo-South African paper and packaging company Mondi PLC on Thursday posted a rise in pretax profit and revenue for the first half on the back of robust performances in all of its operating units, as it got a boost from the weaker euro and from the falling oil price.
The FTSE 100-listed company said its pretax profit in the first half to the end of June rose to EUR392.0 million from EUR312.0 million a year earlier, as revenue increased to EUR3.46 billion from EUR3.15 billion. It said it will pay an interim dividend of 14.38 euro cents, up from 13.23 cents.
Mondi said all of its business units posted significantly improved results in the half and said its capital projects and acquisitions all are performing in line, as is the restructuring of the bags business it acquired in the US in 2014.
"I am pleased to report another strong performance, building on the good results achieved in the prior year. Improvements in underlying profit in all business units, driven by generally positive selling price and volume developments, coupled with good cost control and the contribution from recently completed capital projects, enabled the group to deliver an impressive return on capital employed of 19%," said David Hathorn, Mondi's chief executive.
"With our robust business model, clear strategic focus and culture of continuous improvement, management remains confident of continuing to deliver industry leading performance and making good progress for the year," Hathorn added.
Mondi did add, however, that its second half will take a hit from the seasonal downturn in its uncoated fine paper business and planned maintenance shutdowns at some of its mills. This should be offset by price increases on certain paper grades, though input costs and potential currency volatility may have an influence.
Shares in the company were up 0.3% to 1,598.00 pence on Thursday.
Mondi said its like-for-like sales volumes in the first half were higher across its European and international businesses, defying the continued subdued economic conditions in Europe and an ongoing structural decline in European uncoated fine paper markets. It also saw sales hit in its South African arm by the extended annual maintenance shutdown at its Richards Bay plant.
Average selling prices were higher in the half, with average European benchmark selling prices rising by 3% for virgin containerboard and sack kraft paper, while prices for paper grades in Russia and South Africa also both increased. This was partly offset by lower recycled containerboard and uncoated fine paper prices in Europe, along with mixed pricing conditions in the consumer and fibre packaging units due to product mix changes and input cost movements.
Generally, input costs were lower across the business in the half, with wood costs falling in Europe while the fall in the value of the ruble more than offset increased domestic wood costs in Russia. Average recycling prices were lower year-on-year, though increased in the second quarter, but energy costs for the company were significantly lower thanks to the fall in crude oil, coal and gas prices.
Chemical prices also were lower, though polyethylene prices were higher due to supply interruptions which drove volatility in the market.
Mondi said it was boosted by the ramp-up and full-period contribution from a number of projects completed in 2014, including a bleached kraft paper machine at its Steti facility in the Czech Republic, its recovery boiler replacement in Slovakia, and a pulp dryer as its Syktyvkar plant in Russia.
By Sam Unsted; [email protected]; @SamUAtAlliance
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