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Mondi focuses on high growth areas and integration

By Rod Addy , 21-Feb-2013
Last updated on 21-Feb-2013 at 17:16 GMT

Global packaging giant Mondi will concentrate on higher growth products such as consumer packaging, and business integration following its 2012 €1.2bn acquisition spree, it reported in its full-year results.

In the year to December 31, the company claimed it had made good progress in shifting its portfolio to higher growth products, including acquisitions in corrugated and consumer packaging.

In consumer packaging, which includes products ranging from stand up pouches and microwavable packaging to biodegradable films, the firm’s major acquisition in 2012 was Nordenia, effective from October 1.

In the wake of the move, the business was restructured around four main business units: Packaging Paper, Consumer Packaging, Fibre Packaging and Uncoated Fine Paper.

Operating profit

Nordenia, which has its headquarters in Greven, Germany, added €19m to operating profit in the final quarter of 2012, despite entailing costs of €18m, said Mondi.

It was expected to generate operating cost savings of €20m a year by the end of 2014, the firm said, with half of that benefit realised in 2013.

It had strong plans for product development in consumer packaging, and was gearing up for increased activity in China, aiming to start operations at a factory in Taicang by the end of 2013.This factory would reach full capacity by 2015.

Other acquisitions

Other acquisitions included the remaining minority share in packaging paper outfit Mondi Swiecie, plus the acquisition of two Duropack fibre packaging plants in Germany and the Czech Republic.

The company said integration of acquisitions was on track. Although the start of the year had been tough, because of weak demand linked to low pricing in some areas, prices for most of its products rose in the second half of 2012, said Mondi.

Weak demand for packaging paper grew stronger across the year, driven by central Europe and offsetting weak performance in Western Europe.

Containerboard

Surplus recycled containerboard kept prices low, although they rallied in the second half of the year and further benefits are expected from the acquisition of Duropack in that sector.

Fibre packaging performed strongly, adding 17% to underlying operating profit. Corrugated packaging benefited from stable pricing and volumes and low paper input costs.

Comparing 2012 with 2011, it reported pre-tax profit down 19% from €457m to €371m across the year on sales up 1% from €5.74bn to €5.81bn.

‘Solid financial performance’

“Mondi delivered a solid financial performance in what remains an uncertain economic environment,” said David Hathorn, Mondi group chief executive.

“While the early part of the year was particularly challenging, trading picked up as the year progressed, culminating in a strong final quarter.

“Fundamentals for our core segments remain sound, although recently announced capacity additions by various manufacturers in selected paper grades are a concern, exacerbated by the prevailing demand softness as Europe remains affected by the macroeconomic slowdown.

“However, with the strong finish to the year, coupled with the expected contribution from the recent acquisitions, we remain confident of making progress in the year ahead.”

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