Mondi warns on full-year profit as costs rise

Mondi issued a warning that is full-year profits will come in below expectations on Wednesday, pinning it on rising costs and currency movements.

The FTSE 100 paper and packaging company did confirm underlying operating profit of €245m in its third quarter to 30 September in the trading update - an improvement of 8% year-on-year - which was due to higher sales of containerboard and fibre packaging.

Its board did say it was anticipating a “strong” fourth quarter, due to higher average selling prices.

“Continuing cost pressures and negative currency impacts are expected to result in an underlying performance for the year modestly below market expectations,” it said in its statement.

In the third quarter, costs for wood, energy and chemicals used in its manufacturing were higher, the company reported, with prices for recycling paper - a major raw material for Mondi - surging 15% compared to the third quarter of last year.

Maintenance and close downs of facilities also reduced operating profit by €30m in the period, with the board estimating the full-year hit from those would be €90m.