Mondi encouraged by recent trends

23rd Feb 2010 07:32

Paper and packaging group Mondi reported lower profits for 2009 but took heart from a revival in trading conditions in Europe in the final quarter.Underlying profit before tax in 2009 slipped to £182m from £284m in 2008 on revenue that dipped 17% to £5,257m from £6,345m the year before.Earnings before interest, tax, depreciation and amortisation declined 21% to £645m from £814m in 2008.The net debt position improved to £1,517m from £1,690m.The group’s European uncoated fine paper business traded well throughout the year while other parts of the business in Europe picked up in the final quarter.The South African export focused business continued to be hobbled by the strength of the rand, however, and the group is not expecting a return to satisfactory levels of profitability in South Africa without ‘some increase in the rand selling prices,’ David Hathorn, group chief executive said.For the group as a whole Hathorn believes ‘further supply side reductions may be required to ensure that supply and demand are balanced.’On the bright side, the group has seen ‘a steady improvement in industry order volumes, with some recent price recovery in the European packaging grades,’ and this, together with the cost cutting initiatives the group has implemented ‘positions Mondi well for the year ahead,’ Hathorn said.The full year dividend is 25% lower at 9.5p, compared to 12.7p in 2008.