The international paper and packaging company posted a three per cent increase in underlying profits of 377 million euros, reflecting a solid performance from its Packaging Paper, Fibre Packaging and South African division offset in part by weaker results from its Uncoated Fine Paper and Consumer Packaging divisions.
(READ MORE: Mondi expects operating profit above €367 million)
Underlying earnings per share increased by five per cent to 51.9 euro cents while cash generated from operations was similar to that of the comparable prior period at 439 million euros.
Revenue for the period was in line with the prior comparable year while sales volumes in Mondi’s key paper grades remained unchanged due to a slow economic recovery in Europe.
Regardless of the slight increase in results, [DATA MND:Mondi Limited] declared a 39 per cent increase in its interim dividend to 13.23 euro cents.
“Strong cost management and contributions from successfully completed strategic capital investments, together with the benefits from downstream integration in key packaging segments, enabled the group to offset the impact of lower prices in a number of paper grades,” said David Hathorn, chief executive of Mondi Group, in a statement.
He added that the company remains a leading player in the United States due to its purchase of the bags and krafts paper business from international packaging firm, Graphic Packaging, for 105 million US dollars.
(READ MORE: Mondi acquires Graphic Packaging's kraft business)
“We have continued to invest in the business for future growth. Highlights for the period included the successful commissioning of the 155,000 tonne bleached kraft paper machine at the Steti mill in the Czech Republic and the acquisition of Graphic Packaging’s bags operations and kraft paper mill in the United States,” he added.
“Together with the group’s ongoing capital expenditure programme, including significant projects at our Ruzomberok, Swiecie and Syktyvkar operations, we are confident that these investments will deliver strongly into the future.”
On the other hand, annual maintenance shutdowns took place at Mondi’s Swiecie mill in Poland and Richards Bay mill in South Africa during June 2014 with the balance of the shutdowns scheduled to take place during the second half of 2014.
The impact of the shutdowns on the group’s underlying profits is estimated to be around 50 million euros and 60 million euros of which the first half effect was around 10 million euros.
In the near term, Mondi anticipates that prices increases in some of its packaging paper grades should provide positive momentum.
(READ MORE: Mondi reports record financial performance )
“Market fundamentals remain sound, which, coupled with a continued economic recovery, should prove positive for further growth in the packaging businesses. Overall, we remain confident that Mondi will continue to deliver an industry leading performance,” concluded Hathorn.