MONDI’s interim results to June mirror the roller-coaster of global markets as they struggle to shake off one of history’s deepest recessions.
But the global pulp, paper and packaging group says the first half "exceeded market expectations", despite the continuing eurozone crisis.
Revenues were marginally down, but profit after tax fell 27% from the corresponding six months last year, with average product prices below those of the earlier period.
However, the group highlighted a "good operating performance", strong cash generation of €353m, a return on capital employed exceeding its target of 13%, and an interim dividend up 8%.
"It has been a period of turnaround and recovery," David Hathorn, group CEO, said on Tuesday.
Mondi saw its record performance in the first half of last year fall sharply as the second half degenerated badly by the fourth quarter.
Since then, Mr Hathorn said, volumes were recovering and prices were bottoming, with the company’s mills ramped back up to full production by the end of February.
In May, Mondi acquired 100% of its Swiecie mill in Poland and bought Saturn Management, the company providing the plant with most of its electricity requirements and all of its heat and steam needs.
In July, it bought the outstanding share capital of German packaging company Nordenia International, adding substantially to overall debt.
"We have made significant progress on a number of strategic initiatives, most notably the acquisition of the remaining minority interest in Swiecie and the agreement to acquire a 93.9% interest in Nordenia," Mr Hathorn said. "These steps build on our position as a leading international packaging and paper company, with a strong platform for continued growth in emerging markets."
He said the global macro-economic environment remained a concern, with continued soft demand in certain western European markets.
"Encouragingly, demand in a number of the emerging markets to which the group is exposed remains firm," he said.
It was a good set of results given the tough market conditions, said Rubin Renecke, equity analyst at Kagiso Asset Management, on Tuesday.
He said the company’s dividend increase reflected Mondi’s commitment to returning cash to shareholders and its strong balance sheet.
Earnings were lower than the first half of 2011 but in line with the second half of last year. "This was due to lower pricing and weak demand in the second half of last year, which continued somewhat into the first part of 2012," Mr Renecke said.
He added: "The lower earnings were expected and despite the challenging market conditions, the company is delivering on its strategy and focusing on cost control, inventory management and cash management."
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