Company Data
| Last traded |
R66.00 |
| Change |
R-0.09 |
| % Change |
-0.14% |
| Cumulative volume |
447,451 |
| Market cap |
R7.81bn |
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Johannesburg - Paper maker
Mondi [JSE:MND] posted a rise in first-quarter profit, helped by price increases and higher sales volumes, but said that rising input costs were putting pressure on its margins.
The global paper industry is slowly recovering from a slump triggered by weak demand and overcapacity that was exacerbated by the economic crisis.
Capacity reductions across the industry have boosted its recovery and improved the pricing enviroment. Mondi itself cut 12% of its capacity during the financial crisis.
Mondi, which is also listed in London and mainly involved in the manufacturing of packaging paper, said underlying profit in the three months to the end of March rose to €187m ($278m).
Mondi did not disclose the figure for last year, but said this year's result was "well in excess" of what was achieved in the first-quarter of 2010.
"Price increases have been realised across all major products in the first quarter of 2011. Coupled with sales volume increases across all businesses on a like for like basis, this has more than offset the ongoing cost pressures being experienced across most business segments," the company said in a statement. Mondi said cash flow from operations remained strong, despite an increase in working capital.
The company said input costs remained at or near the highs of 2010. Recovered fibre costs continue to rise, while wood costs remain under pressure. Energy and other raw material costs have also increased on the back of higher oil prices. "Rising input costs are impacting on margins, and the recent weakening of the US dollar is a concern to the extent it may inhibit the ability to pass on further cost increases," Mondi said.
The group said, however, that fundamentals for its main paper grades remained strong and the company is confident of making further progress in 2011.
Mondi said last month it plans to spin off its South African packaging business from the group and list the unit under a new name on the Johannesburg Stock Exchange.