Advertise with

Softer market hits Mondi growth
Softer market hits Mondi growth

Softer market hits Mondi growth


Business Day - Nov 1st 2011, 08:28

Maintenance shutdowns reduce underlying operating profit, moderated selling prices in softer market partly offset by lower input costs 

MONDI Group, the global pulp and paper maker, said underlying operating profit of €136m in the third quarter was well above the same period last year, but significantly below the €175m of the second quarter this year.

In its interim management statement to the end of last month, the group said broad macroeconomic weakness was slowing demand and putting moderate pricing pressure on certain of its products. Mondi said demand weakness was largely driven by destocking. This made predicting near-term underlying demand trends difficult.

It also said lower underlying operating profit in the third quarter from the preceding quarter reflected the effect of planned maintenance shutdowns. These were estimated to have hit underlying operating profit by about €20m, along with the generally softer trading environment.

But Mondi said it would continue to enforce production downtime where appropriate, and that supply-side fundamentals for core product grades remained good.

"The world is a moderately softer place than it has been, and there is an impact of destocking taking place," CEO David Hathorn said yesterday.

He said the bulk of destocking was internal to Mondi, and not its clients, and downtime in the third quarter would lead to a leaner fourth quarter this year.

However, the group said its robust financial position, low-cost operating model, and performance focus left it well positioned to deliver strong returns.

Mondi said that macro-economic uncertainties also moderately lowered sales prices, but this was partly offset by stable or reduced input costs.

It said most emerging market currencies to which it was exposed were slightly weaker against the euro when compared to the second quarter. This provided a small, positive contribution to performance, and renewed dollar strength was also supporting European pricing.

"People were a bit more optimistic earlier this year," Barend Ritter, an analyst at Sanlam Investment Management, said yesterday. He said while Mondi’s statement met expectations, the market had rolled these back a bit in the quarter.

Mondi said some weakness in demand led to lower Kraft paper sales volumes.

But it said export demand for Kraft paper remained good, and sales prices were generally stable through the quarter.

The underlying operating profit of Mondi’s South African operations, while down on the comparable prior-year period, was significantly up on the second quarter of this year. 

Read more about: paper | packaging | mondi |

Related News

Health innovation is an opportunity for South African brands across multiple industries
23/09/2019 - 14:22
With government striving to pass legislation to create a National Health Insurance (NHI) scheme to serve all South Africans, the country’s health and wellness market is in flux. Along with the global trends reshaping the sector, this is a recipe for massive change and disruption that could have wide implications for consumer brands in every segment.

Fabric softener brand ordered to change name after Sta-Soft complaint
12/09/2019 - 09:01
A local fabric softener brand has been ordered to change its labelling after the advertising regulatory board found that its use of the word "soft" was imitating rival brand Sta-Soft.

Multi-million rand Rustenburg Mall underway
09/09/2019 - 11:07
Rustenburg shoppers can look forward to a brand new shopping centre – Rustenburg Mall – set to introduce its first phase in April 2021.

Eliminating packaging is a good start - but here's what supermarkets should do to stop harming the planet
26/08/2019 - 15:02
The first key step towards this vision is widening the packaging-free philosophy to all stores of all the major supermarkets, and, crucially, not giving consumers who might resist change the option to stick with the polluting packaged goods that feel so familiar.

Introducing the Cape Fine and Rare Wine Auction
23/08/2019 - 10:07
With the world market increasingly focused on the fine and rare wines from South Africa, the Cape Winelands is in a stronger position than ever to showcase its fine wine investments. This year, the Cape Winelands is proud to host its first-ever Cape Fine & Rare Wine Auction, an evolution of the historic Nederburg Auction in 1975.