Mondi earnings grow 13% as paper profits boosted by low oil price and exchange rates

Despite a fall in revenues during a challenging economic period, South African paper maker Mondi has announced underlying full-year underlying profits before tax up 10% to €767m as it continued to invest heavily in capital projects.

Boosted by falling wood, chemical and oil prices, the company’s underlying earnings of 107.3 euro cents per share rose 13%
cents, with 99.5 cents of basic earnings per share in the middle of its recently guided range of 98-101 cents.

While the declining input prices gave Mondi shares a boost as the cost of paper production fell, the price of its products have been rising which should flatter margins further.

Revenue dropped 1.1% to €6.402bn as the group continued to face slow economic growth in a number of key markets.

Chief executive David Hathorn cautioned that economic growth in 2015 was "expected to remain below historical averages" in the regions in which the group operates.

"This slow economic growth is expected to continue impact on demand for Mondi's products in the short term, although underlying industry fundamentals remain generally sound, with supply/demand balance supported by supply-side constraint," he said.

The company recommended a final dividend of 28.77 euro cents per share up from 26.45 euro cents per share in 2013. These funds will be payable to shareholders on 21 May.