Mondi upbeat about selling prices as profit rises

Johannesburg - Mondi [JSE:MND], a South African manufacturer of packaging for products from coffee beans to industrial chemicals, said third-quarter profit rose 3% and that prices of key products may improve next year.

Underlying operating profit rose to €227m ($250m) in the three months through September from €221m a year earlier, the Johannesburg-based company said in a statement on Thursday.

“We expect to benefit from stable to higher selling prices in a number of key product segments as we move into 2017 following the downward pressure seen over the course of 2016,” Mondi said. “Costs remain generally stable, albeit with near-term pressure in certain areas.”

Mondi, which has its roots in printing paper and was spun out of Anglo American [JSE:ANG] in 2007, now gets the majority of its revenue from packaging products and is seeking to grow further in the industry. The company said on Monday that it agreed to buy a Russian tray-packaging maker for 2.78bn rubles ($44m).

The company revised the anticipated 2016 operating profit contribution from a capital investment programme to €50m from €60m. Mondi is investing to expand and modernise some of its facilities, with as much as €450m of spending planned for this year.

The shares declined 2% to R287 on Wednesday, valuing the company at R140bn.