http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.20Change: 0.00
R/$ = 11.58Change: -0.02
Au 1197.30 $/ozChange: 0.38
Pt 1199.50 $/ozChange: 2.00
 
 
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 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|International Paper|Kraft|Merebank|Mondi|Mondi Packaging South Africa|Packaging|PROJECT|Projects|Africa|Europe|Hungary|Poland|Russia|South Africa|Richard's Bay Mill|Russian Mill|Electricity Constraints|Electricity Grid|Energy|Equipment|Maintenance|Packaging|Self-sufficient Concerning Electricity|Transport|Richard's Bay|David Hathorn|Mondi|Power|Operations
Construction|Africa|Eskom|Packaging|PROJECT|Projects|Africa||||Energy|Equipment|Maintenance|Packaging|Transport||Power|Operations
construction|africa-company|eskom|international-paper|kraft|merebank|mondi|mondi-packaging-south-africa|packaging-company|project|projects|africa|europe|hungary|poland|russia|south-africa|richards-bay-mill|russian-mill|electricity-constraints|electricity-grid|energy|equipment|maintenance|packaging|selfsufficient-concerning-electricity|transport-industry-term|richards-bay-natural-feature|david-hathorn|mondi-person|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
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Electricity News
anzania's attorney general resigned late on Tuesday, becoming the first political casualty in an energy corruption scandal in the east African country that has led Western donors to delay aid and weakened the currency. The resignation followed a vote in parliament...
The Democratic Alliance on Tuesday called on Deputy President Cyril Ramaphosa to clarify Eskom's latest threat of further rolling blackouts. Spokesperson on public enterprises Natasha Michael said Ramaphosa had to disclose the reason four generators stopped working...
South Africa will announce a series of renewable energy projects on Monday that will add 1 000 MW of power into the country's constrained electricity grid, sources close to the deals told Reuters. Africa's most advanced economy is in the midst of a severe power...
More
 
 
Latest News
China appears to have been routinely underestimating output from its sprawling steel sector, with official figures for last year alone 40-million tonnes below a key industry estimate - an amount equivalent to Germany's entire annual production. Beijing has vowed to...
Lumwana, Zambia
Canada’s Barrick Gold Corp will suspend operations at its Lumwana copper mine, in Zambia’s Northwestern province, after the country enacted legislation that raised the royalty rate on openpit mining operations from 6% to 20%. TSX- and NYSE-listed Barrick, the world’s...
The Labour Court in Johannesburg has set aside the 2011-2014 metal sector wage agreement, the National Employers' Association of SA (Neasa) said on Thursday. The 2011-2014 wage deal was the result of an agreement between the Steel and Engineering Industries...
More
 
 
Recent Research Reports
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.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
 
 
 
 
 
This Week's Magazine
South Africa remains an important manufacturing and export platform for Ford Motor Company, says executive chairperson Bill Ford. However, he adds that other countries on the continent are “becoming interesting”, and that the US carmaker is casting its net wider for...
TO BE PHASED INTO SERVICE The first MeerKAT dish, with another 63 to come
Germany’s Max-Planck-Society (MPG) and the Max-Planck-Institute for Radio Astronomy (MPlfR) are investing €11-million (about R150-million) into South Africa’s MeerKAT radio telescope array programme. The money will be used to design, build and install S-band radio...
Infrastructure spend in sub-Saharan Africa will grow from $70-billion in 2013 to $180-billion by 2025, says PwC capital projects and infrastructure Africa leader Jonathan Cawood. This is one of the findings of PwC’s Capital Projects & Infrastructure report on East...
Private-owned defence and aerospace manufacturer Paramount Group and the Ichikowitz Family Foundation unveiled its Anti-Poaching Skills and K9 Training Academy in Magaliesburg last month.
MATT BARKER Wireless networks should enable users to engage and must provide relevant information to them based on their activity and location
The inclusion of Bluetooth to provide sub-three meter accuracy and heightened functionality for users is one of the ways to change existing wireless networks into engagement networks. An engagement network differs from common wireless networks in that it enables the...
 
 
 
 
 
 
 
 
 
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