MNDI5 May 2011 09:46
Margin pressures at Mondi
Date: Thursday 05 May 2011
LONDON (ShareCast) - Paper and packaging firm Mondi said price increases have been pushed through across all of its major product lines, contributing to the group's best quarterly performance for some time.
Underlying profit in the first quarter of 2011 of €187m was well ahead of the figure for the corresponding period of 2010 and was also better than the results achieved in the final two quarters of 2010.
This reflects both the positive trading environment and a very strong operating performance, the company said.
In the Europe & International geographical segment, all divisions recorded improvements in operating profit, both on the first quarter of last year and the last.
The South Africa Division's underlying operating profit was up significantly on the comparable period in the prior year, and broadly in line with the fourth quarter of 2010.
Cash flow from operations remains strong despite an increase in working capital, largely attributable to increased revenue and seasonal effects.
Following the conclusion of the major capital projects in Swiecie and
Syktyvkar, capital expenditure was markedly reduced when compared to the first quarter of 2010.
The financial position of the group at 31 March 2011 remained robust with net assets largely unchanged from the position at 31 December 2010.
The group expressed concern about the impact on margins that rising input costs are having, while the recent weakening of the dollar is a worry, in so far as it may make it more difficult to pass on price increases.
“However, fundamentals generally remain strong in the group's key paper grades, with the upward pricing momentum witnessed in 2010 continuing into the first quarter of 2011. Given the group's favourable product and geographic exposures, coupled with its integrated low cost position and focus on performance, we are confident of making further progress in 2011,” the group said.
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