Mondi share price rises as company announces higher profits

Mondi Plc (LON:MNDI) has recommended a hefty increase to its final dividend, after a “successful year” in which the company’s efforts to improve margins paid off. The South Africa-based paper and packaging company today reported that its pre-tax profit had increased 24 percent to €619 million in 2014, from €499 million in the previous year. The closely-watched underlying operating profit measure came in at €767 million, up 10 percent from 2013. The company’s full-year revenue was one percent lower at €6.4 billion.

Mondi saw a strong contribution from all its business units, as cost-cutting and other measures to boost margins helped the company overcome slow economic growth in some of its key markets. The company said that its board had recommended a final dividend of 28.77 euro cents per share, bringing the total 2014 dividend to 42 euro cents, up 17 percent on 2013.
Mondi’s chief executive officer David Hathorn commented: “I am pleased to report another successful year for Mondi.” He added: “During the year, we made good progress in growing the business.”

Mondi was a bit cautious in its outlook for this year, saying that slow economic growth would likely continue to impact on demand for its products in the short term. However, the company remains confident of making “further progress in the year ahead”, expecting a boost to its performance from “recently completed capital investments” such as a softwood pulp dryer in Russia and a bleached kraft paper machine in the Czech Republic.

In today’s trading, Mondi shares were up 2.4 percent at 1,307.00p, as of 08:09 UTC. The stock has risen 24.6 percent since the start of the year, boosting the company’s market capitalisation to £6.3 billion.
According to the Financial Times, as of February 14, 2015, the consensus forecast amongst 9 polled investment analysts covering Mondi has it that the company will outperform the market. This stance has been maintained since October 3, 2013, when the sentiment of investment analysts improved from “hold”.
As of 10:04 GMT, Tuesday, 24 February, Mondi Plc share price is 1,302.50p.