Mondi CEO David Hathorn
Photo by: Duane Daws
Improved market conditions in the packaging and South African businesses, as well as the emerging benefits of last year’s acquistions, had offset the impact of the planned third-quarter shutdowns of a number of dual-listed Mondi’s larger operations worldwide.
Mondi on Wednesday reported a 25% hike in group underlying operating profit to €172-million during the third quarter of the year, from the €138-million reported during the comparative period the year before.
The South African operations delivered pleasing results, benefiting from strong domestic demand – with both sales prices and volumes increasing during the quarter under review – and the weaker South African rand, said Mondi CEO David Hathorn.
However, the group noted that the South African division had been negatively impacted by lower average benchmark hardwood pulp prices towards the end of the quarter.
Meanwhile, the packaging and paper group said half of its containerboard mills’ scheduled maintenance shutdowns for the second half of the year were completed, primarily at the group’s large European containerboard and uncoated fine paper mills, with the balance set to take place during the fourth quarter.
This was expected to impact the group’s second-half underlying profit by between €50-million and €60-million, compared with the first half of the year.
Group sales volumes for the third quarter remained stagnant compared with those of the third quarter of 2012 and had fallen below the volumes of the preceding quarter, owing to the scheduled maintenance shutdowns and seasonally weaker demand for uncoated fine paper.
While Mondi remained confident of delivering in line with its expectations for the full year, the group warned that the current low-growth environment, coupled with increased competition in certain areas of the business, presented some challenges going into the new year.
Mondi ended the quarter with net debt of €1.7-billion – a decrease of €83-million from June 2013 – and €797-million of available committed, unused borrowing facilities.