Mondi first-half profit up but warns over H2

Paper and packaging group Mondi posted a jump in first-half pre-tax profit but warned on Thursday that the second half of the year will be hit by planned maintenance closures at a number of its mills and the usual seasonal downturn in its uncoated fine paper business.

For the six months to the end of June, pre-tax profit rose to €482m from €392m, although revenue declined to €3.3bn from €3.5bn, mostly on the back of currency effects and disposals completed in 2015. Excluding these effects, revenue grew 1%.

Underlying operating profit rose to €529m from €490m and the company declared an interim dividend of 18.81 euro cents per share, up from 14.38.

Underlying earnings were up 11% to 75 euro cents per share, reflecting the increase in underlying operating profit and the benefit of lower net finance charges.

Mondi said it saw strong contributions from its consumer packaging, uncoated fine paper and South African divisions, which were partially offset by the anticipated price weakness in certain of its packaging paper grades.

Chief executive David Hathorn said: “We are on track to deliver an anticipated €60 million in incremental operating profit in 2016 from recently completed major capital projects, and our projects in development remain on time and on budget. The Boards recently approved the first phase of a modernisation programme at our Steti mill in the Czech Republic with follow-on investments still under evaluation.

“While we saw some price weakness in certain of our packaging grades in the first half, demand for these products remains strong and pricing has generally stabilised with increases recently achieved in certain grades.”