Why Mondi’s earnings are expected to surge 30%
Paper and packaging group expects an annual increase due to robust demand for its products and higher prices
Paper and packaging group Mondi looks set to continue with its robust performance, with 2018 earnings likely to rise by as much as 29%.
The expected improvement in earnings suggests that the benefits of higher average prices in the interim period continued in the second half of the company’s financial year.
The group has in the past benefited from good demand for its products and higher prices. For instance, a strong performance across the group’s pulp and paper business boosted the firm’s interim financials.
Mondi, whose financial results for the year ended December 31 will be released on February 28, on Friday said it expected underlying earnings before interest, taxes, depreciation, and amortisation (ebitda) to exceed last year’s €1.48bn.
In the first six months of the financial year, Mondi’s underlying ebitda was up 17% to €852m.
The company, which is listed in Johannesburg and London, said it expected basic underlying earnings per share of between 186 euro cents and 192c in 2018, an increase of 25%–29%, compared to the 148.9c posted in 2017.
Basic earnings per share would increase by 21% to 25%, while basic headline earnings per share were also expected to soar by 25% to 29%, to 182c-188c.
“This kind of performance in a tough environment is great for the company. Mondi management has done a good job. Remember they do not choose at what prices to sell. A weak pricing environment can hurt them. So they have done a fantastic job,” Nesan Nair, a portfolio manager at Sasfin Securities, said on Friday.
Mondi’s share price was up 0.94% to R353. The stock is up 14.03% so far in 2019.