Strong demand drives Mondi interim pre-tax profits up 6%

Paper manufacturer Mondi on Friday reported a 6% rise in interim pre-tax profits of €490m (£436m) due to higher average selling prices and solid demand across its packaging businesses.

Underlying earnings before interest, tax, depreciation and amortisation came in at €852m, up 17%, with margin of 22.9%. Underlying operating profit rose to €630m up from €503m in 2017.

Basic underlying earnings per share were 89.2 cents per share, up 26% and the interim dividend was increased by 12% to 21.45 cents a share.

Chief executive Peter Oswald said Mondi continued to make good progress in securing future growth and ensuring the ongoing cost competitiveness through the delivery of its major capital expenditure programme of more than €750m, which was expected to contribute to earnings from 2019.

“The modernisation of our kraft paper facility in Steti (in the Czech Republic) is on track to start-up in late 2018 and work to upgrade the pulp mill at our Ruzomberok mill (Slovakia) has commenced, while we await final permits to proceed with our investment in a new 300,000 tonne kraft top white machine at the same site,” he said.

“We continue to make good progress on smaller capital expenditure projects at a number of our packaging operations, while integration of the recently completed acquisitions is progressing according to plan.”

“The trading environment remains positive going into the second half of the year, with pricing in key fibre based product segments remaining supportive. The second half of the year will be impacted by the usual seasonal downturn in Uncoated Fine Paper.”

“We also expect continued pressure on the cost base across the group, mitigated by our ongoing proactive and comprehensive cost reduction programmes.”