http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.04Change: -0.16
R/$ = 12.07Change: -0.10
Au 1204.60 $/ozChange: 1.40
Pt 1170.50 $/ozChange: 4.00
 
 
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
Clover South Africa’s acquisition of Pretoria-based Ayrshire milk processor Nkunzi Milkway’s fresh dairy business has been approved, with conditions, after initially being denied last year, the Competition Tribunal announced on Thursday. The Competition Commission...
Western Cape Minister of Economic Opportunities Alan Winde
Increasing the export of local products was a key priority, noted Western Cape Minister of Economic Opportunities Alan Winde, with events such as the South African Cheese Festival playing a vital role in this regard. Winde will officially open the 2015 festival in...
The Portfolio Committee on Rural Development and Land Reform commended the progress made by the Department of Rural Development and Land Reform (DRDLR) and the Commission on the Restitution of Land Rights to make sure that claimant’s needs and concerns were...
Article contains comments
More
 
 
Latest News
South African mining and energy adviser Ted Blom has raised a litany of concerns about the state of power utility Eskom and has warned of runaway costs and shortfalls in coal and water, as well as rail capacity. Blom was surprised by the recent buoyancy shown by...
JSE-listed Astrapak will sell specialised packaging systems manufacturer Knilam to Mapflex SA for R17.7-million. The proceeds would be used to reduce Astrapak’s current level of gearing.
The last of the 26 mooring units comprising the Port of Ngqura’s automated mooring system (AMS) have arrived at the port and are expected to improve port efficiency and safety, further driving the Transnet National Ports Authority’s (TNPA’s) objective of establishing...
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
Sappi Southern Africa CEO Alex Thiel
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.
 
 
 
 
 
 
 
 
 
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