Photo: Simphiwe Mbokazi/African News Agency (ANA).

JOHANNESBURG – Global leader in packaging and paper group Mondi invested €347 million (R5.33 billion) during the six months to end June to upgrade its property, plant and equipment as it positions itself for future growth to take advantage of the global trend to reduce the use of plastic. 

The figure was up by €93m as compared to €254m invested last year. The share price rose more than 6 percent on the JSE to R384.70 a share on Friday as the group beat analysts’ market expectations. 

The group reported 17 percent increase in underlying earnings before interest, tax, depreciation and amortisation (Ebitda) to €852m, increasing from €730m reported last year. 

Chief executive Peter Oswald said Mondi delivered a strong performance in the first half, with underlying Ebitda of €852m, benefiting from good demand across their packaging businesses as well as higher average selling prices, while remaining focused on initiatives to drive performance and mitigate inflationary pressures on their cost base. 

“We saw a strong operational performance across the pulp and paper businesses, with the exception of the extended shut at our Richards Bay mill. 

We continue to make good progress in securing future growth and ensuring the ongoing cost competitiveness of our operations through the delivery of our major capital expenditure programme of over €750m, which is expected to contribute to earnings from 2019,” Oswald said.

He said Mondi’s fibre-based packaging business, comprising packaging paper and fibre packaging, was the main contributor to the earnings. 

“We are actively working with our customers, suppliers and recycling companies to find innovative solutions that improve the sustainability of packaging. “We believe flexible packaging, which typically uses 70 percent less plastic than rigid-based alternatives, can contribute towards a global sustainable plastics system, based on circular economy principles,” Mondi said. 

The group also invested in a new 300 000-ton-a-year kraft top white machine and related pulp mill upgrade at its Ružomberok mill. 

“Our major capital projects in the Czech Republic, Slovakia and Russia will increase our current saleable pulp and paper production by around 9 percent when in full operation,” the group said. 

The group’s revenue increased by 4 percent to €3.72bn as a result of higher average selling prices and volume growth in container board and industrial bags while underlying profit grew by 25 percent to €630m. 

Basic headline earnings per share increased by 9 percent to 85.1 euro cents a share. The board declared an interim ordinary dividend of 21.45 euro cents a share.

-BUSINESS REPORT