Mondi (MNDI) continues to demonstrate that packaging is the place to be. Despite a sluggish European economy, structural decline in uncoated fine paper markets and annual maintenance shutdowns at several mills, the packaging giant posted higher sales in four of its five segments, sending underlying operating profit up 30 per cent to €490m (£345m).
A number of factors contributed towards significant profit growth and a punchy return of 19 per cent on capital employed. The company sold higher volumes of packaging at higher prices: average benchmark rates were 3 per cent higher for virgin containerboard and sack kraft paper in Europe, and key paper grades sold for more in Russia and South Africa. Lower input costs were favourable, too, as were depressed energy prices - Mondi is a significant consumer of electricity. Low wood prices in Europe were especially positive, helping to offset some of the damage caused by a weak Russian rouble.
Completed capital projects - including a bleached kraft paper machine in the Czech Republic and a pulp dryer in Russia that can produce 155,000 and 100,000 tonnes a year, respectively - came in handy. Management reckons these and other investments in 2014 added €35m to operating profit.
Broker UBS expects adjusted EPS of 134¢ in the year to December 2015, rising to 150¢ in 2016.
| MONDI (MNDI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,579p | MARKET VALUE: | £7.7bn | |
| TOUCH: | 1,580-1,581p | 12-MONTH HIGH: | 1,606p | LOW: 919p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 780¢* | NET DEBT: | 56% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 3.15 | 312 | 48.6 | 13.23 |
| 2015 | 3.46 | 392 | 60.3 | 14.38 |
| % change | +10 | +26 | +24 | +9 |
Ex-div: 20 Aug Payment: 15 Sep *Includes intangible assets of €655m, or 178¢ a share £1=€1.43 | ||||
