Mondi Declines Most in Three Months After Profit Growth SlowsBy
Prices for products dropped, South African company says
Packaging maker expects better selling prices in 2017
Mondi Ltd. fell the most in more than three months in Johannesburg as the South African manufacturer of packaging for coffee beans to industrial chemicals said third-quarter profit growth slowed on lower prices for its products.
The stock was 4 percent lower at 275.41 rand by 2:45 p.m., the biggest drop since June 27 and set for the lowest close since Aug. 17, extending declines for the year to 10 percent. About 550,000 shares were traded, 95 percent of the three-month average daily volume.
Underlying operating profit rose 3 percent to 227 million euros ($250 million) in the three months through September, the Johannesburg-based company said in a statement on Thursday. That compared with 8 percent growth in the first half of the year.
Profit was hurt by “generally lower average selling prices and a significantly lower fair value gain on forestry assets,” Mondi said.
Mondi, which has its roots in printing paper and was spun out of Anglo American Plc in 2007, now gets the majority of its revenue from packaging products and is seeking to grow further in the industry. The company said on Monday that it agreed to buy a Russian tray-packaging maker for 2.78 billion rubles ($44 million).
The company revised the anticipated 2016 operating profit contribution from a capital investment program to 50 million euros from 60 million euros. Mondi is investing to expand and modernize some of its facilities, with as much as 450 million euros of spending planned for this year.
Looking ahead to 2017, Mondi expects to “benefit from stable to higher selling prices in a number of key product segments,” the company said. “Costs remain generally stable, albeit with near-term pressure in certain areas.”