Mondi on an investment drive
Invests R12.5bn in Poland and Czech
INTERNATIONAL packaging and paper group Mondi said yesterday that it would continue to drive growth through a capital investment programme.
Mondi chief executive Peter Oswald said the group had invested around €800 million (R12.54 billion) in two projects in Poland and the Czech Republic.
“During the period, we commissioned the second phase of our major investment in the ongoing development of our world class facility in Swiecie, Poland, while good progress is being made on the modernisation of our kraft paper facility in Steti, Czech Republic,” Oswald said. He said the integration of acquisitions completed during 2016 and early 2017 was on track. “These acquisitions enhance our geographic reach and product portfolio in corrugated packaging and consumer packaging,” he said.
The successful integration of acquisitions, includes Excelsior Technologies.
In February Mondi acquired 100 percent of the outstanding share capital of Excelsior from funds managed by Endless and certain other minority shareholders, for a total consideration of £33m (R577.85m), on a debt and cash free basis.
The group said the acquisition of Excelsior would support the development of its consumer packaging business in high-growth product applications.
The consumer packaging business is the area the company is expecting to show tremendous growth going forward as the outlook remained positive.
Mondi said it saw a strong demand across packaging paper and corrugated packaging in the first half of the year and it successfully implemented price increases across certain paper grades, of which the full effect is anticipated in the second half.
“The second half of the year will be impacted by planned maintenance shuts at a number of our mills and the usual seasonal downturn in uncoated fine paper. While we continue to see some inflationary cost pressures, we remain confident of making progress in the year and deliver industry leading returns,” Oswald said.
In the results for the six months to end June, Mondi reported a 6.43 percent decline in underlying operating profit to €497m, down from €529m as compared with last year. The group said sales volume growth and higher prices were more than offset by higher costs, a significantly lower forestry fair value gain (down €28m year-onyear), the impact of maintenance shuts (up €20m year-onyear) and a higher depreciation and amortisation charge.
“Mondi delivered a robust performance in the first half of 2017, with revenue up 8 percent, underlying operating profit of €497m and a return on capital employed of 18.7 percent, reflecting management’s ongoing value focus and the strength of our business model,” Oswald said.
The group’s uncoated fine paper business continued to perform very strongly, with underlying operating profit of €135m, delivering a 36.7 percent return of capital employed.
In South Africa, the group’s underlying operating profit of €55m was down 44 percent in the first half of 2016, with a significantly lower fair value gain on its forestry assets, the negative impact of a stronger rand, higher input costs and inflationary cost pressures.
The board declared an interim dividend of 19.10 euro cents per share for the period.
Mondi’s share price was down 2.64 percent to close at R339.71 on the JSE yesterday.
Mondi plant in Richards Bay, KZN. Mondi said it will continue to drive growth through capital investment.