A favourable market backdrop, and a well-timed investment strategy designed to capitalise on it, drove Mondi's (MDNI) underlying operating profit up by 25 per cent to €957m (£757m). That success, and a generous 24 per cent hike to the dividend payout, boosted the dual-listed packaging giant's market valuation on release of its full-year figures.
A key contributor to the group's profit growth was the ramping up of prices. Chief David Hathorn concedes that capacity has started to recover following a wave of mergers in the industry, but is still nowhere near the level necessary to satisfy surging demand for packaging solutions.
Meanwhile, Mondi continues to cut costs and invest. In 2015 those measures added about €50m to operating profit, with a further €60m expected to be delivered in the year ahead. Management is confident that the recently approved €310m outlay on a 'Kraft top white' papermaking machine capable of churning out 300,000 tonnes a year will help to maintain the group's tradition of delivering market-leading returns on capital employed.
Management also has high hopes for new acquisitions, which cost a total of €94m. These latest arrivals will enhance Mondi's product offering in the high-growth consumer packaging market. Together with the continued benefits of cheap oil and rising timber prices, that made for a positive outlook statement.
Broker UBS forecasts EPS of 147¢ this year, rising to 153¢ in 2017.
| MONDI (MNDI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,280p | MARKET VALUE: | £6.2bn | |
| TOUCH: | 1,279-1,280p | 12-MONTH HIGH: | 1,614p | LOW: 1,108p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 791¢* | NET DEBT: | 47% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 5.74 | 457 | 57.5 | 26 |
| 2012 | 5.79 | 368 | 50.1 | 28 |
| 2013 | 6.48 | 499 | 79.8 | 36 |
| 2014 | 6.40 | 619 | 97.4 | 42 |
| 2015 | 6.82 | 796 | 124.0 | 52 |
| % change | +7 | +29 | +27 | +24 |
Ex-div: 21 Apr Payment: 19 May *Includes intangible assets of €695m, or 189¢ a share £1=€1.27 | ||||
