Mondi wary of exchange rate movements

1st Nov 2010 07:11

Underlying operating profit for paper and packaging group Mondi was on the up in the third quarter, both on the preceding two quarters and in comparison with the same quarter of 2009.The sharp increase in underlying operating profit from a year ago was achieved despite turnover climbing only marginally from a year earlier. Selling prices continued to improve during the quarter while order books remain strong.Net debt was reduced to€1,536m at the end of September from €1,632m three months earlier. The average maturity of group committed debt is 3.9 years and untapped committed borrowing facilities are in the region of €1.4bn.Management expressed concern about foreign exchange markets, particularly the continued strengthening of currencies of emerging markets, which is having an effect on Mondi's ability to compete with local rivals in these markets.Meanwhile, the recent weakness of the US dollar versus the euro may undermine pricing in Europe for a number of the group's products."Overall, the price increases achieved to date in all of the group's key grades, together with the ongoing initiatives to contain cost increases, should see the business continue to deliver a strong performance in the final quarter of the year," the group said.