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http://www.investegate.co.uk/Article.aspx?id=20110407070000P33DB
Mondi to demerge S. African packaging arm Date: Thursday 07 Apr 2011 LONDON (ShareCast) - Paper and packaging firm Mondi is to hive off its South African packaging business. Mondi will demerge Mondi Packaging South Africa (MPSA) as it believes MPSA’s future growth plans, especially with regard to its rigid plastics business, are constrained by the Mondi Group's differing strategic focus. “MPSA is unique within the group as no other part of Mondi produces rigid plastics or carton board and therefore the board felt that MPSA would be best placed to take advantage of the considerable opportunities available to it as an independent entity," explained David Hathorn, chief executive officer of Mondi. MPSA’s shares will be listed n the Johannesburg Stock Exchange (JSE) under a new name. The parent company’s shares are listed on both JSE (as Mondi Limited) and the London Stock Exchange (as Mondi plc). As part of the proposed demerger, Mondi Group intends to undertake a "matching action" by way of a share consolidation of Mondi Limited ordinary shares. So far as possible, the matching action will seek to ensure that the effect of demerging MPSA will have “an equivalent but not necessarily identical economic effect” on Mondi Limited and Mondi plc shareholders. The outcome of the proposed demerger may have a material effect on the price of Mondi Group's securities, the group warned. “Accordingly, shareholders are advised to exercise caution when dealing in their Mondi Group shares until a further announcement is made.” --- jh
South African paper and packaging firm Mondi increased full year pre-tax four fold and upped its dividend as demand continues to pickup from financial crisis levels. Pre-tax profit rose to €372m for the year ended 31 December 2010 from €49m a year earlier. Group revenue increased 18% to €6.2bn.
Shares in Mondi (MNDI) rose 14p to 526p after the paper and packaging manufacturer announced that underlying operating profit for the year ended 31st December 2010 is expected to be "considerably" higher than that of the prior year. In addition, it added that special item charges, before tax and non-controlling interests, stood at 22 million Euros (19 million pounds), down from 133 million Euros (113 million pounds) in 2009. In light of this, the group expects earnings per share for the year to come in at between 42-47 Euros cents (36-40 pence), up from the 6.5 Euros cents (5.5 pence) loss recorded a year earlier. Shares in Mondi rose by 16.5p to 528.5p.
I've been watching this one for a few days and have looked in to the company. The last three months have shown a 75% improvement in share price following the downturn that resulted from a poor trading statement. However, they seem to be relatively stable financially, with a further 1.1bn euros available to them. Seems to me as and when the turmoil lifts and people start to spend again that the goods that will be bought will need to be packaged which is where MNDI comes in. As economies turn for the better the demand for paper materials must surely strengthen. Good news today - Credit Suisse amends their rating to neutral from underperforming. As i am new to this game i would greatly welcome other peoples thoughts on MNDI.
Our view: Sell Share price: 146.75p (-16.25p) Investors in South African paper group Mondi will not count yesterday as one of the group's finest. The shares were down 10 per cent after Mondi issued a trading statement under the rules of the Johannesburg Stock Exchange (JSE), where it has a dual listing. Under JSE rules, when basic earnings per share are expected to come in 20 per cent lower than the previous year, a company is obliged to tell the market. The company said that full-year EPS would be between 19 cents and 23 cents, down from 39.5 cents in 2007. It also confirmed yesterday that full-year operating profits would be about 8 per cent down on last year. For the investor who likes a white-knuckle ride, watchers at the company's house broker UBS set a price target of 200p, but concede that they are “concerned by weakening price [and] volumes, which are unlikely to improve over next 12 months.” The experts at Goldman Sachs downgraded the group to a sell yesterday, saying the "first half of 2009 will be tough, with demand trends seen as very weak". Mondi will issue its full-year numbers on 26 February, but we would not be inclined to wait that long. Sell.