Mondi shares hit all-time high after profit surge in first quarter

Shares in Mondi surged by a tenth on Wednesday after the paper and packaging company impressed investors with a big jump in profits in the first quarter.

Underlying operating profit totalled €236m in the three months to 31 March, up 29% year-on-year and 9% ahead of the fourth quarter figure.

Average selling prices in Europe on the whole were in line with last year and the preceding quarter.

However, the group said the bottom line was helped by higher volumes and lower costs across Europe for things like wood, paper for recycling, resin, energy and chemicals all declining.

A stronger US dollar against the euro also benefitted results, both through the translation of dollar-denominated sales and through the
support provided to European selling prices for a number of key paper grades.

Meanwhile, contributions from capital projects and acquisitions, as well as higher selling prices in Russia and South Africa, Mondi said.

However, the company did warn that inflationary pressures in a number of emerging markets will increase going forward, and the recent recovery in oil prices is predicted to affect energy, resin and chemicals costs.

Looking ahead, Mondi said that "much depends on the macroeconomic environment".

"However, given the group's robust business model and clear strategic focus, management remains confident of continuing to deliver industry leading performance and making good progress for the year," the company said.

The stock was 9.9% higher at 1,426p by 14:40, having reached an all-time high of 1,450.3p earlier in the session.

"Average paper selling prices holding up and comparable sales growth across most business, both sequentially and annually, is also welcome news at this stage of the year," said Mike van Dulken, head of research at Accendo Markets.

He said the company confidence in its full-year progress was "going down well with the investment community this early in the year when other corporates are possibly more cautious".