Mondi Group's first quarter profits rise

Mondi Group saw profits in the first quarter rise on the previous year driven by improved market conditions in its packaging paper and South African businesses.

Mondi Group saw profits in the first quarter rise on the previous year driven by improved market conditions in its packaging paper and South African businesses.

The packaging and paper group reported an underlying operating profit of €162m for the first three months of the year, a 35% increase on the previous year's €120m.

During the period, the company was bolstered by recent acquisitions including packaging firm Nordenia and corrugated packaging plants in Germany and the Czech Republic.

Sales volumes were, on average, above the previous quarter, while average benchmark selling prices in the European businesses were largely unchanged.

Selling price increases were realised in recycled containerboard. Price hikes for virgin and white-top containerboard have been announced for the second quarter of 2013.

Average input costs per unit of production were similar to the previous quarter and prior year.

Currency effects were mixed during the quarter boosted by a weaker South African rand, Polish zloty and Czech koruna. However, a stronger Swedish krona and Russian rouble had an negative impact on the group's costs.

The South Africa business was a big contributor to profits, rising above the prior quarter on the back of a positive domestic trading environment in uncoated fine paper and a weaker South African rand.

Europe, on the hand, posted a flat operating profit following a sharp fall in the market price of green energy credits.

Uncertainty surrounding proposed changes to the regulatory environment on renewable energy in Poland, resulted in an €11m write-down of the carrying value of existing green energy credits in the country.

"The effects of expected capacity increases in recycled containerboard and

uncoated fine paper, coupled with prevailing demand softness across the

European businesses, remain a concern," the company said.

"However, recent price increases in the packaging paper grades provide support and good progress is being made in integrating the Group's recent acquisitions. Management remains confident of continuing to make progress, in line with its expectations."

Shares rose 0.18% to 850p at 12:07 Friday.

RD

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