http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.13Change: -0.02
R/$ = 12.07Change: -0.13
Au 1187.17 $/ozChange: -20.08
Pt 1125.50 $/ozChange: -23.50
 
 
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 07, 2008

Operating profit up, but costs worry Mondi

Back
Mondi Group CFO Paul Hollingworth discusses the cost-pressures experienced by the group, while CEO David Hathorn discusses the impact of the South African electricity supply on its overall operations
 
 
 
Construction|Africa|Eskom|Export|Packaging|PROJECT|Projects|transport|Africa|Energy|Equipment|Maintenance|Packaging|Power|Operations
Construction|Africa|Eskom|Export|Packaging|PROJECT|Projects|transport|Africa|Energy|Equipment|Maintenance|Packaging|Power|Operations
construction|africa-company|eskom|export|packaging-company|project|projects|transport|africa|energy|equipment|maintenance|packaging|power|operations
© Reuse this International paper and packaging group Mondi, reported on Wednesday that its underlying operating profit improved for the four months ended April and that its expansion and upgrade projects were on track.



In an interim statement on the group's progress between December last year and April 2008, it said that its operating profit had been pushed up by a strong performance by its Europe & International division, and in particular, by higher prices for its kraft paper and converted bags.

Kraft paper and converted bag prices had risen by about 5% since the year-end, the company said.

CEO David Hathorn commented during a conference call, that the power disruptions experienced in South Africa throughout the first months of 2008 had not materially affected the overall operations of the group, despite the electricity constraints having a direct impact on some of its South African operations.

He explained that its Richard's Bay mill was completely self-sufficient concerning electricity and was not plugged into the national electricity grid, and thus remained unaffected by the power disruptions.

Also, at its Merebank mill, Mondi had voluntarily reduced its power consumption by switching off its mechanical pulp line that could be switched off for a few hours at a time, depending on capacity, in order to assist State-owned power utility Eskom in stabilising the power situation.

Its South African division, however, was negatively impacted on by the timing of planned maintenance shutdowns and lower export sales volumes, mainly in wood chips, as the division had taken a decision to pursue margin and not volume in certain markets.

The company, which diversified miner Anglo American spun off last year, said it remained confident that the measures it had taken to improve profitability were working. Mondi added that a 5% price increase had been implemented on May 1.

COST CONCERNS

The group remained concerned about input cost pressures and said the rising oil price continued to feed through into rising energy and transport bills.

External fibre cost pressures had continued to ease, but had increased in the comparable period given a steep increase in external fibre costs, which went up by about 25% in the first half of last year.

However, the group stated that its results continued to benefit from its ongoing focus on cost reductions, restructuring and productivity improvements, which all assisted in mitigating the impact of cost inflation.

MAJOR PROJECTS

The group reported that good progress on the execution of major projects had been made.

Mondi's new 470 000-t/y recycled containerboard machine and related box plant at Swiecie, in Poland, at a cost of €350-million, and the upgrade of its Russian mill, at a cost of €525-million were making good progress.

"All the equipment for Swiecie has been ordered, and the major contracts have been committed to for the containerboard machine, which is on schedule for completion during the third quarter of next year," Hathorn said.

The group said it expected the containerboard machine to have the lowest operating cost of its type.

Similarly, the upgrade of Mondi's Russian mill, which is being done to lower its cost base in Russia, improve efficiency, increase energy production and revenue, as well as providing extra pulp and paper capacity for the growing Russian market, was making good progress with all equipment contracts agreed to. Construction has started and the project is scheduled for completion in the middle of 2010.

In South Africa, the rebuild of Mondi Packaging South Africa's corrugated packaging paper machine at its Felixton operation had been commissioned on time and within budget and would increase containerboard production by 45 000 t/y to 155 000 t/y.

RESTRUCTURING

The group reported that the closure of the 140 000-t uncoated fine paper mill in Hungary has been completed, with production having ceased in March.

The group had also completed the restructuring and simplification of its European uncoated fine paper divisional structure and said it had begun to see the benefits of these actions.


Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Forests News
LOCAL GROWTH The South African paper business continued to progress with higher volumes, pricing and lower logistics and fixed costs
Pulp and paper producer Sappi has increased its net profit for the three months to March 31, by 75% to $56-million, compared with the profit of $32-million recorded in the March 2014 quarter.
Pulp and paper producer Sappi has increased its net profit for the three months to March 31, by 75% to $56-million, compared with the profit of $32-million recorded in the March 2014 quarter.
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...
More
 
 
Latest News
All grades of petrol will increase by 47c/ℓ on Wednesday, the Department of Energy announced on Friday. The reef price for unleaded 93 and LRP petrol was currently standing at R12.61/ℓ, while unleaded 95 cost R12.89/ℓ.
JSE-listed Tower Property Fund has acquired the Link Hills Shopping Centre, in Waterfall, KwaZulu-Natal for R160.9-million from The Sabre Trust and Matlu Family Trust. The shopping centre, on Inanda Road, was situated in an upper-high-growth residential area, next to...
South Africa recorded a trade deficit of R2.51-billion ($207-million) in April from a revised shortfall of R9-million in March, data from the revenue agency showed on Friday. Exports fell by 7.5% to R84-billion, while imports were down 4.8% to R86.5-billion on a...
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 strongly welcoming the promulgation of the new Part 101 of South Africa’s civil aviation regulations, governing the commercial operation of civil remotely piloted aircraft (RPAs) in South Africa, the Commercial Unmanned Aircraft Association of Southern Africa...
LSM Distributors has contracted engineering consultancy WSP | Parsons Brinckerhoff Africa to undertake the R100-million restoration of the 54-year-old Kyalami racetrack, situated in Midrand. The restoration will assist in re-establishing it as a venue for...
South African Defence Minister Nosiviwe Mapisa-Nqakula has expressed the hope that the defence budget will be significantly increased over the next five years. She did so while addressing the media in her recent budget vote media briefing. The 2015/2016 defence...
The African Development Bank (AfDB) has been an implementing agency for the Global Environment Facility (GEF) since 2008. The relatively young portfolio has 28 projects over 30 countries on the continent according to the 2014 AfDB and GEF annual report released...
PAUL SPEAR Training and development should be an integral and proportionate part of the long-term strategy of all companies, regardless of their size
Investment in South African youth through apprenticeships and learnerships will not only create direct benefits for businesses but will also contribute significantly to job creation and socioeconomic transformation in the country.
 
 
 
 
 
 
 
 
 
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