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Corporate
Mondi sees improvement in sales and profit
Mondi recorded substantial improvements in sales, up 9%, underlying operating profit, up 33% and cash inflow from operations, up 46%. Underlying profit of €502 million was up €125 million and reflected better performances across all the main business areas as increased pricing, focus on operational efficiency and the benefits of restructuring actions all contributed to the financial outcome. Group operating margins of 8.0% were up 1.4 percentage points on the prior year (2006: 6.6%) as a result of an improved pricing environment and the benefits of operational efficiencies, in particular €167 million of cost-savings. These positive developments were partially offset by significant increases in raw materials, particularly the costs of wood, pulp, recycled fibre and chemicals.Cash inflow from operations was up €300 million at €957 million benefitting from an improved trading result and working capital management. It is particularly pleasing that average return on capital employed, a key measure of performance for Mondi, increased from 8.1% to 10.6%, which reflects both improved profitability and tighter management of our capital employed. While this improvement is clearly a step in the right direction, current returns remain unsatisfactory and significant additional cost reductions and further productivity improvements have been targeted. Furthermore, we remain very focused on supply-side discipline as an important component of ensuring ongoing price stability and improvement.
