JSE-listed Mondi’s underlying profit fell by 6% year-on-year to €497-million for the six months ended June 30.
Underlying earnings before interest, taxes, depreciation and amortisation for the period, adjusted for the year-on-year movement in the forestry fair value gain, was up 3%.
"Profitability was down on the comparable prior year period, mainly driven by a significantly lower forestry fair value gain in South Africa and the impact of mill maintenance shuts," CEO Peter Oswald said in a statement on Thursday.
He added that forestry gains were dependent on a variety of external factors, the most significant being the export price of timber and the exchange rate.
Revenue was up 4% on a like-for-like basis, driven by higher sales volumes, higher sales prices and positive currency effects.
Selling prices for the group's packaging paper grades were, on average, above those of the comparable prior year period and South Africa also benefited from higher domestic paper prices.
This was partially offset by marginally lower European uncoated fine paper prices.
Moderate increases in export prices, coupled with a stronger rand, resulted in a fair value gain of €20-million, which was materially weaker than the €48-million in the same period a year earlier.
The lower gain, coupled with other high input costs, offset sales volume growth and higher selling pressure.
“We continue to drive growth through our capital investment programme. During the period, we commissioned the second phase of our major investment in the ongoing development of our facility in Swiecie, Poland, while good progress is being made on the modernisation of our kraft paper facility in Steti, Czech Republic,” he said.
He added that the integration of acquisitions completed during 2016 and early this year were on track.
“These acquisitions enhance our geographic reach and product portfolio in corrugated packaging and consumer packaging.”
Oswald stated that the market outlook remained broadly positive.
“We saw strong demand across packaging paper and corrugated packaging in the first half, and successfully implemented price increases across certain paper grades, the full effect of which is anticipated in the second half.
“The second half of the year will be impacted by planned maintenance shuts at our mills and the usual seasonal downturn in uncoated fine paper. While we continue to see some inflationary cost pressures, we remain confident of making progress in the year and continuing to deliver industry leading returns,” he added.