Mondi has emerged from a protracted period of restructuring in fine shape. The business increased underlying operating profits by 61 per cent to €222m (£185m) in the first half, underpinned by strong sales in Europe, where profits nearly doubled from €108m to €201m.
The group produces uncoated fine paper, as well as converting packaging paper into industrial bags and corrugated paper, and demand has been steadily improving which has enabled Mondi to pass on the cost of higher pulp prices to its customers. Steps have also been taken to lower the cost base through a series of site closures and the transfer of production to low-cost areas such as Russia. However, the ongoing restructuring will involve interruptions to production that will shave €20m from second-half operating profits.
Earlier restructuring helped to boost profits from the corrugated operation from just €1m to €48m, while profits from the bags and coatings division jumped 53 per cent to €55m. Meanwhile, output in South Africa was hit by the strength of the rand which hit export margins and reduced operating profits from €28m to €18m.
UBS is forecasting full-year pre-tax profits of €357m and EPS of 40¢ (2009:€49m/18¢), rising to €482m and 53¢, respectively, in 2011.
| MONDI (MNDI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 478p | MARKET VALUE: | £1.8bn | |
| TOUCH: | 478-479p | 12-MONTH HIGH: | 488p | LOW: 262p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 722¢ | NET DEBT: | 53% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 2.61 | -1 | -7.1 | 2.5 |
| 2010 | 3.03 | 177 | 21.5 | 3.5 |
| % change | +16 | - | - | +40 |
Ex-div: 25 Aug Payment: 14 Sep £1=€1.205 | ||||
