Mondi shares surge as price hikes, cost cuts to drive second-half profits (updated)
UPDATE 2-Mondi shares surge as price hikes, cost cuts to drive second-half profits Recasts lede, adds details and background
July 30 (Reuters) - Paper and packaging group Mondi MNDI.L said on Thursday trading momentum improved in the latter part of the first half following disruption from the Iran war, and forecast stronger profitability in the second half, sending its shares up 11%.
Here are some details:
The company, which designs sustainable paper and packaging products, has raised prices and cut costs to offset supply chain disruptions as well as higher energy and raw material costs stemming from a prolonged Iran war.
It said price hikes introduced across its packaging and paper businesses are expected to be fully reflected in the third quarter, while higher packaging paper prices and a strong order book supported its outlook for the second half.
The company's shares, which had fallen about 13% as of Wednesday, were up 11.5% at £8.80 by 0755 GMT.
Mondi has accelerated efforts to improve efficiency, including the closure of six converting plants announced over the past year, as it seeks to simplify operations and lower costs.
It booked a pre-tax charge of €320 million ($366.43 million) in the first half, including a €206 million impairment related to its Duino recycled containerboard mill in Italy, where performance was hit by overcapacity and trade barriers in key export markets.
The company lowered its 2026 capital expenditure forecast to around €500 million from €550 million earlier.
However, underlying pretax profit fell to €80 million in the first half, from €272 million a year earlier as cost inflation due to the Iran war bit into margins.
($1 = 0.8735 euros)
(Reporting by Atharva Singh in Bengaluru; Editing by Sonia Cheema and Louise Heavens)
((Atharva.Singh@thomsonreuters.com; +91 8090911601))