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28, Mar 2024 -

Mondi Q1 profit soars to €236m

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Dual-listed pulp and paper group Mondi’s first quarter operating profit surged 29% year-on-year to €236-million, owing to volume growth and lower input costs across most of the European businesses, good contributions from capital projects and acquisitions and higher selling prices in Russia and South Africa.

Operating profit was also 9% higher quarter-on-quarter, the group said in a statement on Wednesday, 13 May 2015.

The South African division benefited from higher average domestic selling prices, the stronger US dollar, gains from land sales and a higher-than-anticipated forestry revaluation gain. However, domestic demand for the division’s key grades was lower than the previous quarter owing to seasonal effects in uncoated fine paper and the weaker industrial sector affecting demand for pulp and containerboard. Average selling prices in Europe for all key paper grades were, meanwhile, broadly in line with those in the previous quarter and, with the exception of recycled containerboard, also in line with the comparable prior year period. Average benchmark recycled containerboard prices were around 6% lower than in the first quarter of 2014.

On a like-for-like basis, sales volumes were up across most businesses on both the comparable prior year period and the previous quarter. Further, Mondi benefited from generally lower input costs, including wood costs, paper for recycling, resin, energy and chemicals, relative to the comparable prior year period, driven in part by currency impacts. However, inflationary pressures in a number of the emerging markets in which the group operated were expected to increase going forward.

In addition, the recent recovery in the oil price was expected to negatively affect the cost of energy, resin and chemicals. The strengthening of the US dollar versus the euro provided a net benefit to the group, both through translation of dollar-denominated sales and through the support provided to European selling prices for a number of the group’s key paper grades. The weaker Russian rouble in the early part of the year had a net negative impact on the domestically focused uncoated fine paper business, offset in part by the export-oriented Russian packaging paper operations.

During the first quarter, the scheduled maintenance shut of the Richards Bay mill in South Africa was completed. In 2014, this shut took place in the third quarter. Maintenance shuts were also scheduled for the second quarter at the Swiecie mill, in Poland, and at two of the group’s kraft paper mills. The impact of maintenance shuts on yearly operating profit was estimated to be around €80-million.

Source: Mondi (edited)

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