- Underlying operating profits up 13 per cent
- Sales volumes flat, some selling prices fall
- Company able to offset rising input costs

Paper and packaging group Mondi delivered a 13 per cent increase in underlying operating profits in the first quarter despite a 'mixed' trading environment and flat sales volumes.

Underlying operating profits totalled €183m in the three months to March 31st, up from €162m the year before and 14% ahead of the €161m reported in the fourth quarter of 2013.

Sales volumes were "broadly in line" with last year and the preceding quarter, Mondi said, mainly due to the re-scheduling of maintenance shuts in the second half of the prior year.

The company said that profit growth came despite an increase in key input costs over the quarter, with increases in wood costs and paper for recycling affecting the European operations. However, the impact was offset by "energy optimisation projects and restructuring initiatives completed during the prior year".

In Europe, average selling prices for all key paper grades were lower, with the exception of recycled containerboard.

Pricing in the South Africa division was higher as it continued to benefit from good domestic demand, helped by a weaker rand and higher fair value gains on forestry assets.

"The trading environment remains mixed. As anticipated selling prices for a number of the group's key paper grades are currently below those of the prior year.

"However, fundamentals in our core markets remain generally solid and price increases in certain grades are under discussion."

While no significant maintenance shutdowns occurred during the first quarter, the company warned that the majority of shuts for this year will take place towards the end of the second quarter and into the second half. These will have a €50-60m impact on operating profit for the year.

BC

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