LSE- and JSE-listed paper and packaging firm Mondi Group delivered a strong performance for the six months ended June 30, against a backdrop of increasingly challenging trading conditions, with underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) rising by 5% to €894-million.

For the first half of 2019, Mondi achieved profit before tax of €632-million, up 29% on that of the prior-year period.

CEO Peter Oswald said in an announcement on Thursday that higher average selling prices, the contribution from capital investments and acquisitions, and a higher forestry fair value gain more than offset the impact of planned maintenance shuts, lower volumes in certain segments and higher costs.

“Our initiatives to drive sustainable performance and mitigate inflationary pressures on our cost base continue to deliver strongly.

“Our capital investment programme to deliver value accretive growth and enhance the ongoing cost competitiveness of our operations remains on track.”

The €335-million modernisation of Mondi’s Kraft paper facility in Steti, Czech Republic, which started up in the fourth quarter of 2018, contributed to its strong performance in the period.

Moreover, Oswald highlighted good progress on previously announced major capital investment projects at Ruzomberok in Slovakia, Syktyvkar in Russia and Steti mills, as well as the smaller expansionary projects at a number of Mondi’s packaging operations.

At the end of July, Mondi completed the simplification of its corporate structure from a dual listed structure into a single holding company structure under Mondi.

“We believe this will simplify cash and dividend flows, increase transparency, remove the complexity associated with the previous structure and enhance strategic flexibility,” posited Oswald.

An interim ordinary dividend of 27.28 euro cents apiece has been declared.

OUTLOOK

Going into the second half of 2019, Oswald noted that ongoing macroeconomic uncertainties continued to impact on the trading environment.

He indicated that demand was generally softer across the markets in which Mondi operated, while prices for key paper grades were currently below those of the first half.

Further, the group expected a considerably lower forestry fair value gain in the second half.

“Our relentless focus on continuous improvement is expected to lessen the impact of these pressures,” said Oswald.