Mondi, the biggest producer of office paper in Europe, said on Thursday the difficult trading conditions experienced in the latter part of 2008 had continued to impact its first quarter of this year.
Mondi, which was spun off from mining group Anglo American in 2007, said in a statement its underlying operating profit for the three months to the end of March was similar to that of the final quarter of 2008.
Mondi said an improvement in the results from the Europe & International Division were offset by a decline in the South Africa division.
”Results were significantly below the comparable period for the prior year,” the company said without giving figures.
The global paper industry has struggled for six years to climb out of a slump, burdened by over-capacity and soft prices, and the global economic crisis has further dimmed its prospects for 2009 with demand falling even lower.
Paper producers slashed output last year to try to bring supply in line with demand, and have said they are prepared for more reductions as the global slowdown bites.
The South African paper maker posted a 49% drop in 2008 headline earnings per share (EPS) to 20,3 euro cents.
Headline EPS is the main profit gauge in South Africa and strips out certain one-off, financial and non-trading items.
On Thursday, it said it was making good progress on the various initiatives taken in response to the global economic downturn, including delivering on the €180-million cost-reduction programme it announced in February.
Mondi said it was also exiting various higher cost operations, focusing on working capital management and reducing capital expenditure so as to ensure it remains well positioned to benefit when market conditions improve.
Mondi said it was in a sound financial position, with net debt at end of March of around €1,62-billion, a decrease of around €70-million on the position at the end of December 2008.
Mondi’s rivals include Finland’s Stora Enso, UPM-Kymmene, and M-real, Norway’s Norske Skog, Sweden’s Holmen and South Africa’s Sappi. — Reuters