Sharp uptick in Mondi’s earn­ings

Business Day - - COMPANIES - Siseko Njobeni In­dus­trial Writer njobe­nis@busi­nesslive.co.za

Third-quar­ter earn­ings for listed packaging and pa­per group Mondi rose 30% be­cause of higher prices, im­proved per­for­mance of its busi­nesses and con­tri­bu­tions from ac­qui­si­tions.

The strong per­for­mance of the fi­bre packaging, con­sumer packaging and un­coated finepa­per busi­nesses in the quar­ter ended Septem­ber 30 boosted the com­pany’s un­der­ly­ing earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (ebitda) as higher sell­ing prices more than off­set higher costs.

This is a con­tin­u­a­tion of a trend in the first half of 2018, when sta­ble sales vol­umes and higher prices off­set ris­ing costs and main­te­nance shut­downs.

The higher aver­age sell­ing prices look set to boost the firm’s full-year re­sults, notwith­stand­ing the ex­pected neg­a­tive im­pact of the shut­down and ramp-up of the Steti mill in the Czech Repub­lic and pres­sure on costs in the fourth quar­ter.

The group has pre­vi­ously said that the usual sea­sonal down­turn in un­coated fine pa­per gen­er­ally af­fects sec­ond­half per­for­mance. The firm on Wed­nes­day re­leased a trad­ing up­date for the quar­ter in which it said it had seen “man­age­able” up­ward pres­sure on its cost base in the quar­ter. Mondi said mill main­te­nance shut­downs and in­fla­tion in­creased the com­pany’s cash fixed costs.

The im­pact of planned mill shut­downs on ebitda for the quar­ter was un­changed at €30m, com­pared to the cor­re­spond­ing quar­ter in 2017.

It said cur­rency move­ments had a mod­est im­pact on per­for­mance in the quar­ter, as the strength of the dol­lar and the weak­ness of the rand rel­a­tive to the euro largely off­set the neg­a­tive im­pact from a weaker Rus­sian rou­ble and Turk­ish lira.

A stronger dol­lar has a net pos­i­tive ef­fect on Mondi’s dol­lar­de­nom­i­nated sales of glob­ally traded prod­ucts. Mondi said its €335m mod­erni­sa­tion project at Steti was on course and would be com­mis­sioned in the fourth quar­ter of the year. The project, which en­tails re­build­ing fi­bre lines, de-bot­tle­neck­ing ex­ist­ing packaging-pa­per ma­chines and in­stalling a new re­cov­ery boiler, should im­prove the plant’s en­vi­ron­men­tal per­for­mance.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.