Global packaging and paper company Mondi reported a rise in earnings for the first quarter, driven by higher sales volumes, good cost control and fewer planned maintenance shutdowns.
The company’s underlying earnings before interest, tax, depreciation and amortisation (ebitda) for the three months to end-March rose to €290m from €261m in the previous quarter. The improvement included a €2m forestry fair value gain, reversing a €27m loss in the fourth quarter of last year.
The increase was driven by stronger demand in the company’s corrugated packaging and flexible packaging business, with higher sales volumes and stable performance in key areas, the company said in a trading update on Thursday. However, the uncoated fine paper business faced weak market conditions and lower prices.
The company said its performance was achieved despite lower average selling prices compared with the end of last year, “with demand and operational efficiency helping offset pricing pressures”.
“In the first quarter of the year, we have seen stronger order books driven by increased demand for our sustainable packaging products. This has supported recent price increases, which we expect to come through from the second quarter,” said CEO Andrew King.
“Towards the end of the first quarter, global trade tensions heightened macroeconomic uncertainty. While the direct impact of announced tariffs on our operations is limited, we remain mindful of the potential second-order impacts that could affect trade flows, consumer confidence and supply chains.”
Mondi said it had made progress with its capacity expansion projects, with the new kraft paper machine at Steti in the Czech Republic performing well. Additionally, the converted paper machine in Duino, Italy, started up in April, increasing Mondi’s production capacity for high-quality recycled containerboard.
The company said it had completed the acquisition of Western European packaging assets of Schumacher Packaging as part of the company’s strategic direction.
“The company is now focused on integrating the newly acquired assets to drive sales,” it said.
The company said it expected recent price increases to reflect from the second quarter.
At 10.30am on the JSE, the company’s shares were 2.9% higher at R279.25.
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