Mondi posts increased profit for 1H 2016 ended 30 June 2016
(Johannesburg, South Africa, August 04, 2016) Underlying operating profit for the half-year ended 30 June 2016 increased 8% to €529 million compared to the first half of 2015. We saw strong contributions from Consumer Packaging, Uncoated Fine Paper and the South Africa Division, driven by volume growth, pricing benefits and forestry fair value gains, respectively. This was partially offset by Packaging Paper, which was negatively impacted by lower average selling prices, and Fibre Packaging, which saw lower sales volumes and experienced negative currency effects.
Pricing movements in the Group’s key paper grades were mixed, with domestic currency selling prices significantly up in Uncoated Fine Paper, more modestly up in the South Africa Division, and down in Packaging Paper on the comparable prior year period.
Generally weaker emerging market currencies had a net negative impact on translation of the profits of our domestically focused uncoated fine paper and Fibre Packaging operations in those countries, partly offset by the benefits of the export oriented packaging paper and pulp operations in Russia, Poland and South Africa.
Underlying earnings increased 11% to 75.0 euro cents per share, reflecting the increase in underlying operating profit and the benefit of lower net finance charges
Commenting on the result, David Hathorn, Mondi Group chief executive, said:
“Mondi delivered a strong performance in the first half of 2016 with underlying operating profit up 8% to €529 million and a return on capital employed of 21.2%. We saw strong contributions from Consumer Packaging, Uncoated Fine Paper and the South Africa Division, partially offset by the anticipated price weakness in certain of our packaging paper grades.
We continue to make good progress in driving growth through our capital investment programme. 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 modernization programme at our Štětí mill in the Czech Republic with follow-on investments still under evaluation.
In April 2016 we completed the acquisition of a corrugated packaging plant in Poland, and we have recently completed two acquisitions that will further enhance our product offering and geographic reach in the growing consumer packaging segment.
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 stabilized with increases recently achieved in certain grades. The second half will be impacted by planned maintenance shuts at a number of our mills and the usual seasonal downturn in our Uncoated Fine Paper business. Furthermore, we anticipate a lower forestry fair value gain than was recognized in the first half. We expect to continue to benefit from stable input costs and incremental contributions from our capital investment programme, together with the stability afforded by our downstream converting businesses.
While mindful of the heightened macroeconomic and political uncertainties in Europe, we remain confident of continuing to deliver an industry leading performance in line with our expectations.”
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