http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.11Change: 0.00
R/$ = 11.90Change: -0.02
Au 1205.90 $/ozChange: -0.17
Pt 1147.50 $/ozChange: -1.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
May 03, 2012

Mondi operating profit falls, says demand picking up

Back
Africa|Environment|Export|Flow|Mondi|Mondi Swiecie|Projects|Standard & Poor|Africa|Europe|South Africa|Electricity Price Hikes|Energy|Flow|Paper
Africa|Environment|Export|Flow|Projects||Africa|||Energy|Flow|
africa-company|environment|export|flow-company|mondi|mondi-swiecie|projects|standard-poor|africa|europe|south-africa|electricity-price-hikes|energy|flow-industry-term|paper
© Reuse this



JSE- and LSE-listed pulp and paper group Mondi on Thursday reported lower underlying operating profit as the weaker trading environment seen towards the end of 2011 continued into the early part of 2012.

But the company said demand was improving, with its sales volumes in the three months to the end of March, on average, higher than in the previous quarter.

Underlying operating profit fell to €120-million in the first quarter, from €132-million in the final quarter of 2011 and €179-million in the prior year.

Although selling prices across all major paper grades were on average lower than those achieved in the previous quarter, Mondi said a trend of improving prices towards the end of the quarter was evident. The benefits of these improving prices, partly offset by rising fibre input costs, were expected to be realised from the second quarter onwards.

Average input costs were lower than the prior quarter, but increased during the period with closing benchmark prices being higher than those at December 31.

Benchmark hardwood pulp prices had increased by 15% at March 31 from December 31 levels and recovered paper increased by 30% over the same period.

Wood costs remained at similar levels to those of the previous quarter and spot prices have started to increase on the back of improving demand, with the expectation of further price recovery in noncontracted volumes as the year progresses.

Price increases of up to 10% have been announced effective from June.

Mondi’s South Africa division’s underlying operating profit was well down on the prior comparable year period and the final quarter of 2011.

Domestic sales of uncoated fine paper and pulp improved, while export sales of white-top containerboard saw lower average selling prices and weaker volumes owing to ongoing destocking in Europe.

Lower pulp selling prices severely impacted returns; however, prices have trended upwards from their lows in January, which should contribute to an improved performance in the second quarter, the group said.

The South African business, Mondi Shanduka Newsprint, also continued to be impacted by a rising cost base, largely owing to a series of significant electricity price hikes.

Mondi stated that selling price increases had been negotiated and were expected to take effect from the second quarter, restoring Mondi Shanduka Newsprint to a reasonable level of profitability.

The group’s cash flow for the quarter remained strong, while working capital levels were maintained in the targeted range of 10% to 12% of turnover.

Capital expenditure was at similar levels to that incurred in each of the previous two quarters of 2011 and was expected to increase during the remainder of the year as expenditure on the energy and debottlenecking investment projects start to ramp up.

The group said in a statement that its financial position at March 31 remained robust with net debt reducing further from €831-million on December 31 to €792-million.

The successful completion in April of the tender offer to acquire the 34% noncontrolling interest in its Polish unit, Mondi Swiecie, to increase the group’s holding to 93.2%, resulted in cash outflow of about €235-million in mid-April.

The company said a process had been implemented to acquire the remaining shares from those shareholders who did not respond to the initial offer, which was expected to result in a further outflow of about €60-million in the second quarter.

Further, Mondi has maintained its investment grade credit ratings from Moody’s (Baa3 outlook positive) and Standard & Poor’s (BBB- outlook positive). The average maturity of the group’s committed debt facilities was 4.2 years compared with 4.3 years as at December 31, with unused committed borrowing facilities in excess of €750-million after taking the Mondi Swiecie acquisition into consideration.

“Overall performance for the first quarter of 2012 was in line with our expectations. As anticipated, the generally weaker trading environment seen towards the end of the prior year continued into the early part of the first quarter,” the company assured.

The reviewed results for the half-year ending June 30 would be published on or around August 7.

Edited by: Mariaan Webb
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Agriculture News
THE COPE GEARBOX The Cope gearbox, which was developed in cooperation with German gear manufacturer Renk, offers up to eight motors at the motor end
Vertical roller mills manufacturer Loesche last year received an order to install a Loesche Mill type LM 70.4+4 in Calabar, Nigeria, the largest Loesche mill to date. Loesche was awarded the contract in July 2014 by Sinoma for United Cement Company of Nigeria (UCCN)...
DBX35 The new Fiori DBX35 self-loading concrete mixer is designed specifically for emerging markets
Concrete brick, block and paving-making machinery and technology supplier Pan Mixers South Africa (PMSA) in March launched the new Fiori DBX35 self-loading concrete mixer, designed specifically for emerging markets in Africa that require high-quality concrete on...
M7A2 The new M7A2 chute and automated block-making machine, produces building material such as standard dry-stacked, interlocking blocks, suitable for load-bearing construction, boundary walling and other building purposes
Brick and block making machine manufacturer Hydraform has introduced two new automated block-making machines to the South African building and construction market. The new machines are fully automated making them safer to operate, while also reducing labour...
Article contains comments
More
 
 
Latest News
South Africa’s crude steel production dropped by a sizeable 17.2% year-on-year to an estimated 530 000 t in April, amplifying a global trend that saw world steel production decline by a comparatively marginal 1.7% to 135-million tons in the fourth month of the year....
The Treasure the Karoo Action Group (TKAG) on Friday called on government to delay publishing final regulations and issuing rights for shale gas exploration in the Karoo, until a 24-month strategic environmental assessment (SEA) has been concluded. TKAG CEO Jonathan...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
FREDRIK JEJDLING Sustainability becomes an important part of a business’ decision-making process
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96