Mondi says profits to drop by up to 50 per cent

By Rory Harrington

- Last updated on GMT

Related tags: Business cycle, Recession, Late-2000s recession

Mondi Group announced yesterday its 2009 full year profits are likely to plummet by around 50 per cent on the back of a “pretty tough” first half of the year and restructuring costs of €128m.

In 2008, Mondi’s underlying full year profit before tax was €284m, which translated into a loss of €103m after special items totalling €387m had been taken into account.

The group, which is scheduled to publish its full results next week, said it had been obliged to issue a trading statement under requirements from the Johannesburg Stock Exchange once it was “reasonably certain”​ the financial results for the period would differ by “at least 20 per cent from those of the previous corresponding period”.

No profit warning

“This is not a profit warning”,​ Mondi chief financial officer Andrew King told FoodProductionDaily.com. “We are required to issue a statement of this nature when we believe the results will have that margin of difference – be it an increase or decrease in profit.”

In the statement, Mondi forecast that its basic underlying earnings per share would fall from (euro cents per share) 33 in 2008 to between 16 and 20 – a drop of between 42 and 52.9 per cent.

Mondi confirmed that its underlying operating profit for the second half of 2009 was expected to be above that of the first half - but below that of the comparable period in 2008.

“We are a cyclical business and we have been impacted by the economic downturn,”​ said King. “The company had a pretty tough first half of 2009 but we did see some signs of improvement in the second half.”

The company added that the full year results to 31 December 2009 had also been hit by a net restructuring charge of €128m in response to the global recession. This mainly related to a goodwill impairment in Europapier, asset impairment costs in Austria and Germany and restructuring costs associated with the mothballing of the paper machine at the Merebank mill in South Africa, said Mondi.

Related topics: Processing & Packaging

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