Mondi leaps on profit hopes and limited impact from EU vote

SHARES in packaging company Mondi climbed to an eight-month high on the back of a solid trading update.

The FTSE 100 company says its underlying operating profit for the six months to June 30 will come in above last year’s figure of €490m (£410m).

It also expects its halfyear earnings per share to enjoy an increase of between 8pc and 14pc yearon-year to 73 to 77 cents.

Broker Jefferies described the trading update as “positive”. Justin Jordan, of Jefferies, said Brexit will have a “limited” impact on the packaging company, as it has no mills in the UK and just 3.7pc of the group’s revenues come from the UK.

Separately, data from third-party consultant RISI showed demand growth for recycled containerboard has been “strong” in the second quarter of the year. The robust trading update lifted the blue-chip stock 63p, or 4.3pc, higher to £15.31.

On the wider market, hopes of central bank stimulus and an onslaught of corporate earnings lifted the

FTSE 100 index 13.9 points, or 0.21pc, to 6,724.03.

Sub-prime lender Provident Financial became the top FTSE 100 riser after it posted a 17.6pc rise in adjusted pre-tax profit for the six months to June 30 and hiked its dividend by 10pc to 43.2p. Shares jumped 148p to £27.48.

Engineer GKN was also among the top performers, up 11.1p to 301p, on the back of a confident full-year outlook.

Shares in BT bounced 12.2p to 399.7p after the telecoms regulator Ofcom ruled that Openreach, the division within BT that maintains the UK’s

broadband infrastructure, should become a “legally separate company within the BT Group”.

On the other side, oil major BP’s second-quarter profit fell short of consensus expectations, sending shares tumbling 5.8p, or 1.3pc, to 434.6p. The group’s adjusted earnings before interest and tax came in at $1.3bn (£990m), 18pc below forecasts.

Housebuilders were also among the biggest laggards after Deutsche Bank slashed the price targets of Barratt Developments, Taylor

Wimpey, Persimmon and Redrow. Reflecting on Brexit uncertainty, the bank revised its forecasts on UK housebuilders downwards, predicting “a moderate downside scenario”, where volumes and prices both fall by 10pc. Shares in Barratt Developments dropped 13.7p, or 3.3pc, to 405.3p,

Berkeley Group lost 82p to £25.45, Taylor Wimpey slipped 4.2p to 144.9p, Persimmon shed 40p to £15.88 and mid-cap stock Redrow closed down 4.5p at 318.2p.

Broadcaster ITV joined the fallers, off 4.3p to 184.8p, as broker Kepler Cheuvreux cut its target price from 225p to 185p. Traders also said investors were derisking ahead of today’s interim results.

Elsewhere, Barclays said tour operators remained “out of favour”, as analysts think a short-term reduction in demand could cause companies to warn on thirdquarter results. Patrick Coffey, of Barclays, said: “With demand risk, material foreign exchange swings, oil price changes, geopolitical uncertainty and small tour operators going bust, it all starts to feel a bit like 2009.”

TUI AG shrugged off the bearish note, rising 13½p to 924½p, while mid-cap stock

Thomas Cook advanced 0.9p to 59.9p.

Finally, WideCells Group will list on London’s main market today, having raised £2m.