Boost for Mondi thanks to 'strong demand'

Mondi interim revenue surged 4% to €3.72bn, thanks to a "positive trading environment", stronger demand and higher average selling prices. 

By 14:33 on Friday afternoon, Mondi's share prices had also jumped, with Mondli Limited [JSE: MND] trading at R380.44, up 5.09%; and Mondi PLC [JSE: MNP] trading at R382.36, up 6.11%. 

Basic underlying earnings for the six months ended June 30 were up 26% to 89.2 euro cents, the JSE and London-listed paper and packaging firm said.

Group CEO Peter Oswald said the business had benefited from "strong demand across its packaging division", while it focused on initiatives aimed at improving performance and mitigate pressures on cost base.

"We saw a strong operational performance across the pulp and paper businesses, with the exception of the extended shut at our Richards Bay mill," said Oswald.

Mondi said it would cease production of uncoated fine paper at its plant located in Merebank, south of Durban, due to rising hardwood pulp costs.

Its acquisition of 11 000 hectares of forest plantation in KwaZulu-Natal in May, for R408m, is expected to enhance wood supply to the firm’s Richards Bay mill and improve cost competitiveness.

"The second half of the year will be impacted by the usual downturn in uncoated fine paper," the company said.

It declared an interim dividend of 21.45 euro cents per share, which will be paid on September 14. 

It said the second half of the year would be impacted by the "usual seasonal downturn in uncoated fine paper" and that it expected continued pressure on the cost base across the group.

The company said it noted the uncertainty caused mainly by Chinese import policies, and would monitor development in the UK plan to exit the European Union, including "the increasing use of trade tariffs and economic sanctions".