http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 18.11Change: -0.06
R/$ = 16.06Change: 0.10
Au 1191.62 $/ozChange: -2.38
Pt 930.00 $/ozChange: 5.00
 
 
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 About 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|Efficiency|Eskom|Export|Packaging|Power|PROJECT|Projects|transport|Africa|Energy|Equipment|Maintenance|Packaging|Operations
Construction|Africa|Efficiency|Eskom|Export|Packaging|Power|PROJECT|Projects|transport|Africa|Energy|Equipment|Maintenance|Packaging|Operations
construction|africa-company|efficiency|eskom|export|packaging-company|power|project|projects|transport|africa|energy|equipment|maintenance|packaging|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

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
 
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
Updated 15 minutes ago While international companies are keen to invest in South Africa, they are unable to meet the conditions of employment that have been extended to non-parties, forming part of a myriad of reasons why the the Free Market Foundation (FMF) is challenging the current...
Updated 1 hour 18 minutes ago South Africa- and Botswana-based research institutions have teamed up to research dynamic spectrum access and the sharing of television (TV) band frequencies using a TV white space (TVWS) experimental network. South Africa’s Council for Scientific and Industrial...
Randgold CEO Mark Bristow
Updated 1 hour 37 minutes ago Mining companies owed it to their host countries and their shareholders to invest in the troughs so that they could reap the benefits in the peaks, Randgold Resources CEO Dr Mark Bristow said on Tuesday. Speaking during a panel discussion at the 2016 Investing in...
More
 
 
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
 
 
 
 
 
This Week's Magazine
Power and automation company ABB is in the launch phase of its highest payload, multipurpose industrial robot, the IRB 8700. The robot has a reach of 3.5 m and can handle a payload of up to 800 kg. “When designing the IRB 8700, we emphasised reach and payload, as...
Identity and Access Management (IAM) is a critical facet of a connected security ecosystem, as controlling the confidentiality, integrity and authorisation of data access and use is key to securing new digital business channels. However, companies face several...
RORY YOUNG Managed security services provide companies with a means to actively monitor their environment and ward against threats
Data underpins digital business models, the digital economy, the Internet of Things and the fundamental changes in the ways people interact and protecting data is crucial to securing new ways of doing business, says T-Systems South Africa information and...
The City of Cape Town will issue a tender for the procurement of electric buses for its MyCiTi service, in line with the council’s commitment to lower its carbon footprint, says executive mayor Patricia de Lille. The tender, to be advertised early in February, will...
The iSimangaliso Wetland Park Authority signed a R10-million contract last month with local tailings storage facility specialists Cyclone Engineering Projects to remove about 100 000 m3 of dredge spoil obstructing the natural course of the uMfolozi river, in...
 
 
 
 
 
 
 
 
 
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 $149 Close
Subscribe Now for $149