South Africa's Mondi says Q1 profits up on higher sales, lower costs

May 13, 2015 8:18 AM

JOHANNESBURG (Reuters) - Paper maker Mondi said on Wednesday its first-quarter operating profit rose 29 percent on higher sales, lower input costs in its main European market and increased selling prices in Russia and South Africa.

Workers from Mondi paper mill stand behind a fence in the town of Stamboliyski, south from Sofia in a file photo. REUTERS/Stoyan Nenov

The South African company said in a statement that contributions from capital projects and acquisitions also helped boost its underlying operating profit to 236 million euros ($266 million) for the three months to end-March compared with 183 million euros in the corresponding period a year ago.

Mondi, which is also listed in London, said the returns were 9 percent above Mondi's 2014 fourth quarter operating profit 216 million euro.

The company said that on a like-for-like basis, sales volumes were up across most businesses on both the comparable prior year period and the previous quarter.

The strengthening of the dollar versus the euro provided a net benefit to the company which also makes office paper and cement bags, partly through dollar-denominated sales.

The cost of wood, recycling paper, resin, energy and chemicals were all lower than the comparable period, Mondi said, but warned that inflationary pressures in some of the emerging markets where it operates are expected to increase.

"In addition, the recent recovery in the oil price is expected to negatively affect the cost of energy, resin and chemicals," the company said.

The global price of oil has risen, supported by bets that U.S. crude stockpiles will fall.

Mondi has been struggling with lower prices for its paper products and lower global demand but has kept its head above water through acquisitions and increasing prices.

($1 = 0.8880 euros)