Mondi ups profit, eyes more cost cuts

Johannesburg - Paper maker Mondi  [JSE:MND] said on Monday its third-quarter underlying profit was higher than a year earlier and said it plans more cost cutting measures on the back of a slow down in demand.

Mondi, which is also listed in London , said underlying operating profit for the quarter to end-September stood at 136 million euro which was higher than the comparable period a year earlier. The company did not provide a figure for previous year.

Mondi, mainly involved in the manufacture of packaging paper, said its performance was supported by weakness in emerging markets currencies against the euro. The global paper industry is struggling to recover from a slump triggered by weak demand and overcapacity, exacerbated by a slow down in the economy.

To hasten its recovery, Mondi spun off its South African packaging business and listed it on the Johannesburg exchange in July. It also refurbished a mill in Russia and ramped up production in Poland.

Mondi, whose key operations are in central Europe, Russia and South Africa, said it would close its industrial bags facility in Aberdeen, which will cost it about 5 million euro.

The company also said it disposed of its Unterland flexible packaging business to Sun European Partners at a loss of 4 million euro.
“Further restructuring of the coatings and consumer packaging business will take place during the fourth quarter resulting in restructuring costs of approximately 6 million euro,” the company said.

Mondi’s rivals Sappi , UPM-Kymmene’s and Stora Enso have also warned demand would slow more in the struggling paper sector.