Mondi restarts dividends after 'robust' trading

Mondi restarted paying dividends as the paper and packaging company reported a 26% decline in first-half profit after the Covid-19 crisis reduced demand for its products.

Pretax profit for the six months to the end of June fell to €466m (£420m) from €632m a year earlier as revenue dropped to €3.45bn from €3.77bn. Underlying operating profit fell 23% to €524m.

The FTSE 100 group cancelled its final dividend for 2019 in April to conserve cash as the Covid-19 crisis escalated. On Thursday the company declared a dividend of 29.75 euro cents a share for 2019 taking the annual payout to 57.03 cents a share. It also proposed an interim dividend of 19 cents a share, down from 27.28 cents a year earlier.

Chief Executive Andrew King said: "Having delivered a robust trading performance in the first half of the year and given our resilient business model and strong financial position, the board has revisited the decision taken in April to suspend the final 2019 dividend and is pleased to resume the payment of dividends."

Mondi shares rose 4.2% to £14.85p at 08:18 BST.

Average selling prices fell for paper in the first half, more than offsetting good volume growth for corrugated and flexible packaging. Uncoated fine paper volumes were hit by reduced demand as offices and commercial premises shut down during the crisis.

King said the outlook was uncertain for the second half with pricing for pulp and paper below or in line with the first-half average. Demand for packaging staple items is solid but trading is weak with some industrial customers. Orders for uncoated fine paper have picked up from April's lows but will stay below pre-crisis levels in the near term, he said.