Mondi reports 36% drop in 2009 profit

The paper and packaging firm said today that sales in 2009 had dropped 15% to EUR 5.3bn but that the first half the year was more difficult due to sharp volume declines and pressure on prices, particularly in its European operations.

Underlying pre-tax profit fell by 36% to EUR 182m despite cost savings of EUR 251m, which were ahead of the firm’s EUR 180m target for the year.

Group chief executive David Hathorn said he was encouraged by a steady improvement in order volumes and some recovery in prices, but said further capacity closures might be required.

“While there has been substantial industry capacity rationalisation over the past year, further supply side reductions may be required to ensure that supply and demand are balanced,” he said.

Mondi’s European corrugated business reported a 53% drop in operating profits of EUR 23m due to weak demand and average recycled containerboard prices dropping 31% year-on-year.

Nonetheless, by December prices had picked up from an August low and the firm has highlighted a new containerboard machine coming on line in Poland and the recent sale of an Austrian mill.

“It was pleasing to see the recovery in demand [in the second half of the year], which supported price increases in a variety of our packaging segments,” said Hathorn.

In the trading statement, Mondi referred to the possible deal to sell UK corrugated plants to Smurfit Kappa, but said there remained “no certainty” that this transaction would be completed.

In the bags and specialities division, operating profits fell by 48% to EUR 82m while the uncoated fine paper division reported a 16% hike in profits to EUR 146m.

South African operating profits fell by 74% to EUR 32m and Hathorn said future performance would “largely depend on the pace and extent of the global economic recovery”.

MONDI 2009 RESULTS
(in EUR millions)

Revenue 5,257 (6,345 in 2008)
EBITDA 656 (814)
Underlying operating profit 294 (441)
Underlying profit before tax 182 (284)
Pre-tax profit after special items 49 (103m loss in 2008)

Click here for today’s headlines from across the packaging industry

Popular Articles