Mondi profit drops in first half

Paper and packaging company Mondi reported a drop in first-half profit on Thursday, mainly due to a significantly lower forestry fair value gain in South Africa and the impact of mill maintenance shutdowns.

In the six months to the end of June, underlying operating profit fell to €497m from €529m in the same period a year ago, while pre-tax profit declined to €462m from €482m. Group revenue rose to €3.6bn from €3.3bn and the interim dividend per share was lifted to 19.10 cents from 18.81 cents a year ago.

Revenue was up 4% on a like-for-like basis, driven by higher sales volumes, higher sales prices and positive currency effects.

Meanwhile, selling prices for the group's packaging paper grades were, on average, above those of the comparable prior year period and South Africa also benefited from higher domestic paper prices. This was partially offset by marginally lower European uncoated fine paper prices.

Chief executive Peter Oswald said: “We continue to drive growth through our capital investment programme. During the period, we commissioned the second phase of our major investment in the ongoing development of our world-class facility in Swiecie, Poland, while good progress is being made on the modernisation of our kraft paper facility in Steti, Czech Republic. The integration of acquisitions completed during 2016 and early 2017 is on track. These acquisitions enhance our geographic reach and product portfolio in corrugated packaging and consumer packaging.

“The market outlook remains broadly positive. We saw strong demand across packaging paper and corrugated packaging in the first half and successfully implemented price increases across certain paper grades, the full effect of which is anticipated in the second half. The second half of the year will be impacted by planned maintenance shuts at a number of our mills and the usual seasonal downturn in uncoated fine paper. While we continue to see some inflationary cost pressures, we remain confident of making progress in the year and continuing to deliver industry leading returns."