Higher prices and capex boost packaging firm Mondi
The packaging and paper group keeps planned maintenance shut costs low in the first quarter
Higher average selling prices, contribution from recent acquisitions, expansion projects, as well as lower planned maintenance shut costs, boosted packaging and paper group Mondi Plc’s performance in the first quarter to end-March.
The group, which is listed in London and Johannesburg, said underlying earnings before interest, tax, depreciation and amortisation (ebitda) rose 16% to €471m in the quarter.
Mondi, a manufacturer and seller of packaging and paper products, said selling prices for its key paper grades were, on average, higher compared to the same period in 2018, while, on a like-for-like basis, sales volumes were marginally lower.
It said on Thursday that costs in the first quarter were marginally higher than the comparative prior year and flat compared to the previous quarter. The company said among the key input costs, wood, energy and chemical costs were higher than the previous comparable period.
However, it said inflationary cost pressures were mitigated by cost-containment at its operations.
The effect of currency movements had a net neutral impact on ebitda “as the effects of weaker Russian rouble and Turkish lira were offset by a stronger dollar and weaker rand relative to the euro”.
The group said the impact of maintenance shuts on underlying ebitda were slightly lower at €15m, from the prior period’s €35m. The effect of maintenance on earnings in the year to end-December 2019, however, is expected to be €150m from 2018’s €110m.
Mondi said its fibre packaging business benefited from higher average kraft paper selling prices after the implementation of price increases in the second half of 2018 and early 2019. It said the uncoated, fine-paper business performed strongly as higher selling prices offset higher costs and lower volumes.
Its shares were down 1.59% to R306.04 on Thursday, having now fallen 1.14% so far in 2019.