Mondi’s business outlook positive

SOUTH African paper and packaging firm Mondi reported a 3 percent increase in underlying operating profit to €981 million (R13.53 billion) for the year to end-December with a return on capital employed at 20.3 percent.

The group said the outlook for the business remains positive.

Chief executive David Hathorn said: “We anticipate a more challenging trading environment in certain uncoated fine paper markets following price erosion in Europe over the course of 2016, combined with emerging market currency volatility.”

Hathorn added that the group saw good contributions from all its businesses, despite pricing headwinds in a number of key paper grades.

Group revenue came down 2 percent to €6.6bn owing to the impact of currency movements. The group said its cash generation remained strong with cash generated from operations of €1.4bn up 10 percent on the prior year. It reduced its net debt by €115m to €1.38bn.

Mondi’s increase in 2016 in underlying operating profit

business partly offset by negative currency translation effects and ongoing challenges in the US and CIS industrial bags businesses.

Consumer Packaging made good progress with strong volume growth and improving margins.

Mondi completed four acquisitions totalling €185m in 2016.

“Our South African division was negatively affected by sharply lower average pulp export selling prices and higher input costs, which were only partially offset by positive currency effects, a higher fair value gain on forestry assets and domestic price increases,” Hathorn said.

The board declared a final dividend of 38.19 euro cents a share, up from 37.62 euro cents a year earlier, making a total payout for the year of 57 euro cents, compared with 52 euro cents in 2015.

Mondi shares gained 2.67 percent to close at R308 on the JSE yesterday.