Mondi Plc (LON:MNDI) saw its shares top the blue-chip leaderboard on Friday as the packaging and paper group reported a 25% jump in first-half underlying profit, benefiting from higher average selling prices, and good demand across its packaging businesses.
The FTSE 100-listed saw its underlying operating profit rise to €630mln in the six months to 30 June, up from €503mln a year earlier.
The South Africa-based company saw its first-half underlying earnings (EBITDA) rise by 17% to €852mln, with a margin of 22.9% and a return on capital employed of 21.3%.
Peter Oswald, Mondi’s group chief executive officer commented: “The trading environment remains positive going into the second half of the year, with pricing in key fibre based product segments remaining supportive."
he added: “The second half of the year will be impacted by the usual seasonal downturn in Uncoated Fine Paper. We also expect continued pressure on the cost base across the Group, mitigated by our ongoing proactive and comprehensive cost reduction programmes.”
The group, which is listed in London and Johannesburg, is paying an interim dividend of 21.45 euro cents per share, up 12% on the 19.10 euro cents paid a year earlier.
Shares in demand
In mid-morning trading, Mondi shares were 5.9% higher at 2,194p.
AJ Bell investment director Russ Mould commented: “It may be one of the lesser-known names in the FTSE 100 but first-half results from paper and packaging business Mondi are particularly impressive given the currency and cost headwinds facing the business.”
He added: “The seemingly mundane packaging sector has been enlivened in 2018 by the bid approach for Mondi’s rival Smurfit Kappa in March and this space is benefitting from demand created by the shift to online shopping.”
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