In the run-up to these results, investors were warned that Mondi’s (MNDI) 2017 profits risked getting choked by higher wood, energy and chemical prices, a sharp rise in benchmark paper for recycling costs, maintenance shutdowns and an appreciation in emerging markets currencies and the US dollar. They needn’t have worried.
The paper and packaging specialist overcame mid-teen cost inflation by increasing prices across its entire product range. Supported by strong demand, the group reported “marginally higher” volumes off these higher selling prices, resulting in a 4 per cent rise in underlying operating profit to €1bn (£892m). Management expects cost challenges to persist in 2018, but is confident that Mondi will continue to find a remedy.
That confidence is reflected in the decision to reward shareholders with a €1 per share special dividend. Chief executive Peter Oswald told us that balance sheet strength means Mondi can easily afford to finance a special dividend, on top of the 62¢ ordinary payment and ongoing investments to expand capacity by 2019.
Investec expects adjusted pre-tax profit of €1.03bn in 2018, giving EPS of 166.8¢, up from €941.2m and 155.2¢ in 2017.
| MONDI (MNDI) | ||||
| ORD PRICE: | 1,952p | MARKET VALUE: | £9.48bn† | |
| TOUCH: | 1,952-1,953p | 12-MONTH HIGH: | 2,145p | LOW: 1,684p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 765¢* | NET DEBT: | 33% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 6.48 | 499 | 79.8 | 36 |
| 2014 | 6.40 | 619 | 97.4 | 42 |
| 2015 | 6.82 | 796 | 124 | 52 |
| 2016 | 6.66 | 843 | 132 | 57 |
| 2017** | 7.10 | 887 | 139 | 62 |
| % change | +7 | +5 | +5 | +9 |
| Ex-div: | 03 May | |||
| Payment: | 25 May | |||
| £1=€1.12. *Includes intangible assets of €809m, or 167¢ a share **Does not include 2017 special dividend of 100¢ (same dates apply). †Includes Johannesburg-listed shares | ||||
Supported by Daniel Liberto
