Mondi share price (LON:MNDI) falls after it warns on profits

Shares in packaging products company Mondi sank this morning after it warned its profits would miss expectations due to cost pressures and negative currency impacts.

In a trading update for the half-year to the end of June, Mondi said it expects a strong final quarter supported by higher average selling prices and good growth, but its underlying performance for the year will be “modestly” below market expectations.

Shares in the company tumbled 8.23 per cent to 1,917p in morning trading.

Mondi added that third quarter operating profit of €245m (£220m) was eight per cent higher than the previous year, but costs for wood, energy and chemical products were higher than the prior year. Benchmark recycling paper prices were up 15 per cent compared with the year before.

Cash fixed costs rose as a result of inflationary cost pressures and the impact of maintenance shuts, which were estimated to reduce operating profit by €30m in the third quarter and around €90m for the full year.

Currency movements also hit operating profit, mainly driven by a weaker US dollar, Turkish Lira and Russian rouble.

Mondi, which was spun out of mining giant Anglo American, is listed on the London and Johannesburg stock exchanges and has a market cap of around £10bn.

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