Trouble at the mill for Mondi as upkeep costs dent results

PROFITS at packaging and paper company Mondi have been hit by a slowdown in the value of its South African forestry assets and higher costs of maintaining estates, which have offset good sales growth so far this year.

The firm’s revenue for the six months to June 30 was €3.58bn (£3.23bn), 8.2pc higher than a year previously.

But pretax profits slipped from €482m to €462m as the firm was forced to spend €40m on maintaining its paper mills – twice what it spent a year previously. Its annual maintenance of a mill in Russia, as well as planned maintenance at other mills, meant production was interrupted. The second half of the year is also expected to be disrupted by planned maintenance.

Profits were also dented by the value of its forestry estate, which was worth €28m less because of the export price of timber and a stronger rand.

Mondi, which produces packaging materials, boxes and paper for a variety of uses, increased its interim dividend to 19.1c, from 18.8c. Its shares fell 2.7pc to £19.48 yesterday.