Mondi reports interim profit, sees strong second half

A strong performance for its Europe & International division and improving conditions in its South Africa division have led to paper and packaging group Mondi reporting interim headline earnings a share of €0,24 a share.

This compared to a headline loss a share of €0,01 a share in the six months ended June 30, 2009.

Profit from continuing operations rose to €135-million in the six months ended June 30, 2010, compared with a loss of €24-million the year before.

The paper and pulp producer, led by group CEO David Hathorn, reported improving order inflows and sales volumes, as well as price increases across all paper grades during the first six months of the year.

Overall, the group’s Europe and International division had achieved an 86% increase in its operating profit to €201-million, compared with €108-million the year before.

Exports from Europe had benefited from a weaker euro against the dollar.

However, the South Africa division saw a 36% drop in its underlying profit to €18-million for the six months ended June, compared with the underlying profit of €28-million recorded the year before.

While sales prices had improved across all products, the stronger rand had eroded export margins in South Africa.

Mondi also expected increasing labour and electricity costs to impact on the division’s performance in the second half of the year.

“Despite cost pressures, the positive pricing momentum witnessed in Europe since the beginning of the fourth quarter of 2009 in most of the group’s key grades should see the business continue to deliver a strong performance in the second half,” commented Hathorn.

He added that the South Africa division would likely benefit from the further management actions taken to improve profitability, although much depends on the outlook for the rand and export pulp prices.