Mondi plc shares shot more than 3% in early trade on the JSE on Friday after the paper, pulp and packaging group recommended a special dividend, citing strength in its financial position and confidence in its cash-generating capacity.
Shareholders will be rewarded with a special dividend of €1. That is in addition to an ordinary total dividend of €0.62 in the year to December, which was up 9% on the previous year.
The possibility of a special dividend had been on investors’ radar screens.
Mondi reported a 4% rise in underlying profit to €1.01bn, helped by higher selling prices and higher volumes, which more than higher operating costs and other offsets.
"We benefited from good demand and higher average selling prices in most of our businesses, while our continuous drive for operational performance improvements mitigated the inflationary pressures on our cost base caused by the general economic recovery," CEO said in the results statement.
Group revenue was up 7% to €7.09bn. Adjusting for the effect of acquisitions, revenue rose 4%, helped by the higher selling prices.
Mondi, which was unbundled from Anglo American in 2007, competes with the likes of Sappi in its suite of products.
At 9.44am, the share price was up 3.35% to R308.56 on the JSE.