Mondi (MNDI) said late last month that half-year profit would be "significantly" higher than last year, and it was. A 35 per cent surge in underlying operating profit to €366m (£315m) beat expectations, and a confident outlook on pricing had analysts rushing to upgrade forecasts.
Even after stripping out last year's substantial acquisitions, profit increased by nearly a quarter. True, all the major mill maintenance shutdowns will fall in the second half and cost up to €60m, but analysts at investment bank UBS still think Mondi, dual-listed in London and Johannesburg, will make a full-year operating profit of €695m. And the broker has upgraded forecasts for underlying pre-tax profit by 8 per cent to €590m and adjusted EPS by 14 per cent to 93¢ (from €468m and 70¢ in 2012).
Much of the optimism is driven by packaging paper prices. Divisional profit rose by 42 per cent to €148m, and a €50 per tonne price hike this month should repair "unsatisfactory" profits from recycled containerboard used in corrugated packaging. Nordenia, bought for €657m, has repaid Mondi's faith, too, driving a fourfold increase in consumer packaging profit to €39m. Elsewhere, higher prices and a weak rand meant the South African operation made 50 per cent more profit, and stable pricing generated a small increase from office paper, although new capacity in France is a threat.
MONDI (MNDI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,026p | MARKET VALUE: | £4.98bn | |
| TOUCH: | 1,025-1,026p | 12-MONTH HIGH: | 1,031p | Low: 541p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 516¢* | NET DEBT: | 67% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 2.82 | 222 | 31.7 | 8.9 |
| 2013 | 3.34 | 229 | 35.3 | 9.6 |
| % change | +19 | +3 | +11 | +7 |
Ex-div: 21 Aug Payment: 17 Sep *Includes intangible assets of €684m, or 141¢ a share £1=€1.16 | ||||
