Packaging group Mondi has reported a 15% increase in operating profit to €295 million in the first quarter of its financial year.
The group added that this figure is a 6% increase on the previous quarter.
It said higher-than-average selling prices and profit improvement initiatives across the company more than offset higher operating costs, as well as the impact of maintenance shuts and negative currency effects.
Higher Costs & Steady Sales
Mondi admitted that costs were generally higher than in the previous year, such as key input costs, like wood, energy and chemical costs. It said that the notable exception was paper for recycling costs, where average benchmark European prices were down 15% compared to the first quarter of 2017.
Like-for-like sales volumes were 'stable' on the comparable prior year period, the group said, with growth in Packaging Paper offset by lower volumes in Uncoated Fine Paper due to the extended maintenance shut at Richards Bay in South Africa.
The prolonged maintenance shut at the Richards Bay mill had an estimated impact on operating profit of approximately €35 million for the first quarter alone, and Mondi estimates that the closure will have an approximate impact of €115 million for the full year of 2018.
Positive Outlook
In a statement, the packaging company said that its ‘outlook for the business remains positive’.
‘We continue to experience a strong pricing environment in a number of our key product segments, supported by good demand growth, although we do continue to see inflationary cost pressures across the Group and currencies are currently a headwind.
‘With our robust business model, clear customer focus and culture of driving performance, we remain confident of sustaining our track record of delivering value accretive growth.’
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Aidan O'Sullivan. Click subscribe to sign up to ESM: European Supermarket Magazine.
