Board prices have ‘bottomed out’, Mondi says

In an interim management statement issued today, the international paper and packaging company announced that operating profit for the third quarter of 2009 was “modestly below that” of the previous quarter, but in line with expectations.

The group introduced price increases across all paper grades used in packaging over the period – partly driven by increasing input costs, such as for pulp and waste paper – but added that these would have little effect on its financial performance until the new year.

The firm said that a number of its cost-cutting initiatives have had a positive effect on its overall performance.

In today’s statement, the firm said: “Many of these [price] increases have come too late to materially impact current year performance, but support our view that prices in the packaging grades have bottomed out.”

Mondi’s corrugated business volumes continued to improve during Q3. “In recycled containerboard, while average third-quarter test-liner prices were around 13% lower than those of the first-half, price increases amounting to circa 50% were announced in September and October,” the statement said.

“Similarly, while kraft-liner prices were down on average 12% versus the first-half, increases of circa 25% were announced in September.”

The company added that the “actual price increases achieved and the timing thereof is dependent on ongoing negotiations with our customers”.

During Q3, specifically in September, saleable production started at Mondi’s new 470,000-tonne lightweight recycled containerboard paper machine in Swiecie, Poland, which the group said would have a marginal effect on 2009′s operating profit.

Elsewhere, Mondi’s bags and specialities business saw underlying operating profit up on the previous two quarters. The firm announced a circa 12% hike in the price of sack kraft paper, which it said was not expected to influence margins until the new year.

Looking ahead, Mondi acknowledged that prices are improving, but added that “the extent of any recovery is largely dependent on the pace and extent of the global economic recovery, which is uncertain”.

Today’s statement painted a marginally more positive picture of trading than Mondi’s half-year results, published in August, which revealed a EUR1m loss for the first six months of 2009.

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