(Alliance News) - Mondi PLC on Friday said its performance in the third quarter was strong as high selling prices helped offset significant cost pressures, boosting profit.

But the Weybridge, England-based paper and packaging firm warned about political and economic uncertainties around the globe.

Mondi shares were up 1.8% at 1,400.50 pence in London early Friday. They were up 2.5% at ZAR289.67 in Johannesburg.

Underlying earnings before interest, tax, depreciation and amortisation from continuing operations, excluding those in Russia, jumped by 55% to EUR450 million for the third quarter to September 30 from EUR290 million a year before.

Corrugated Packaging benefited from higher average selling prices, while Flexible Packaging performed well, with resilient demand during the period, Mondi said.

Uncoated Fine Paper achieved higher average selling prices and grew pulp volumes. But uncoated fine paper volumes were lower. The non-cash forestry fair value gain was higher.

In the third quarter, Russian operations generated after-tax profit of EUR104 million and Ebitda of EUR129 million. Russian unit is classified as held for sale and presented as discontinued operations.

In August, Mondi entered into an agreement to sell Syktyvkar mill, its most significant facility in Russia, for around EUR1.5 billion.

The disposal is conditional on the approval of Russian government. Furthermore, the planned remittance of the cash balance excluded from the deal of RUB16 billion, about EUR260 million, by form of a dividend to Mondi before completion requires the approval of Russia's finance ministry.

These approvals remain outstanding, Mondi said.

Mondi also said its EUR1 billion expansionary capital investment programme is progressing well.

This programme includes a EUR400-million new 210,000 tonne per annum kraft paper machine at its flagship Steti mill in Czech Republic. Start-up is expected in 2025, with full production ramp up by 2027.

In August, Mondi agreed to acquire the Duino mill near Trieste, Italy. It plans to convert the existing lightweight coated mechanical paper machine into a recycled containerboard machine, with an annual capacity of around 420,000 tonnes. The total acquisition and capital investment cost is estimated at around EUR240 million.

The company said it continued to actively consider further investment opportunities.

Mondi warned that significant political and economic uncertainties remain, expecting inflationary pressures on its cost base to continue in the fourth quarter.

By Artwell Dlamini; artwelldlamini@alliancenews.com

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