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History and Structure
Mondi is an international packaging and paper Group, listed on both the Johannesburg and London stock exchanges. The company employs more than 26,000 workers and runs production operations across 29 countries, with key interests in South Africa, central Europe, Russia and other emerging markets. The company is truly integrated across the production chain, from forestry right through to the manufacture of pulp, paper, corrugated packaging, industrial bags and newsprint.
Mondi started off as a division of Anglo American when the Merebank Mill was built in 1967. After expanding throughout South Africa, the company set its sights on Europe in the early 1990’s and started a long process of expansion through acquisition. From 2004 to 2007 the global paper and packaging industry suffered from production overcapacity and slow demand growth, and Anglo decided to unbundle Mondi, which listed separately in July 2007. Given its tough operating environment, the company decided to streamline its structure once again for the sake of cost control.
Source: www.mondigroup.com
Financial Results
Mondi has recently released their results for the year ended 31 December 2012, and has managed to recover admirably from a disappointing first quarter. The company has reported improved volumes and pricing after Q1, as well as strong cash generation from operations of €845 million.
The group achieved a ROCE (Return on Capital Employed) of 13.7%, which exceeded the Group’s through-the-cycle target of 13%, but fell short of the 15% ROCE achieved in 2011. Earnings per share dropped 3% from 71.8 € cents in 2011 to 69.6 cents in 2012, but management were able to raise the total dividend for the year by 8% from 26 € cents in 2011 to 28 cents in 2012.
Group revenue increased by 1.2% to € 5,807 million, while underlying EBITDA (Earnings before interest, taxes, depreciation and amortization) decreased from 16.8% to 15.9%, and under-lying operating profit decreased from 10.8% to 9.8%. When analysing the development of underlying profit from 2011 to 2012, it is clear that management’s cost reduction, volume improvements and acquisitions and disposals has contributed positively. The sole detractor from operating profit was net negative price variances.
Source: www.mondigroup.com
Capital Allocation
Mondi has spent €1.2 billion on acquisitions as part of their initiative to increase exposure to the higher growth packaging segments of the market. As a result, the capital employed in packaging businesses has risen from 57% to 67% of the Group’s total. The company is also very well positioned to take advantage of growth in emerging markets, with 50% of turnover already originating from those regions. Capital expenditure has dropped off from € 700 million in 2008 to € 307 million for 2012, with two major projects announced this year: the €128 million Ružomberok recovery boiler and the €70 million Štěti paper machine. Management expects excellent results in terms of IRR (internal rate of return) from both projects.
Source: www.mondigroup.com
Current Valuation and Future Prospects
Mondi currently trades at a PE ratio of 17.29 and a dividend yield of 2.73%, and the share price has climbed 58% over the past 6 months. The company’s only rival in the local paper industry, Sappi, trades at a PE ratio of 34.05 and has not declared a dividend since late 2008. Sappi has struggled to remain profitable over the last years, but still remains a highly cash generative business. Both these companies benefit from the fact that the paper industry is very capital intensive and produce high barriers to entry, and also offers investors an effective rand hedge.
Mondi’s future prospects hinges on its ability to shift its operations towards more profitable segments of the market, and to maintain its recent run of value adding acquisitions.
Kind regards,
Cor Van Deventer
Sources: www.mondigroup.com
www.moneyweb.co.za
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
![[IMAGE]](image.php@width=300&height=150&cropratio=2%253A1&image=%252Fnews_images_sn%252F1317717632.jpg "Man walks past the Johannesburg stock exchange offices in Sandton") South African stocks ended a touch lower on Tuesday, tracking major overseas markets on fears political gridlock in Italy could reignite the euro zone debt crisis. Full story ![[IMAGE]](image.php@width=300&height=150&cropratio=2%253A1&image=%252Fnewsimages%252F2013-02-26T143358Z_1_AJOE91P14GO00_RTROPTP_3_OZABS-KUMBAIRONORE-STRIKE-COURT-20130226.JPG "Iron ore core sample at one of Atlas Iron Limited's prospective iron ore mine near Port Hedland") South Africa's labour court has ruled to prevent a planned strike at Kumba Iron Ore's Kolomela mine, the company said on Tuesday. Full story |
 Italy's stunned political parties looked for a way forward on Tuesday after an election that gave none of them a parliamentary majority, posing the threat of prolonged instability and European financial crisis. Full story  A rocket fired from Gaza
exploded in Israel on Tuesday, the first such attack since a
November truce, and a militant group said it launched the strike
to retaliate for the death of a Palestinian in an Israeli jail. Full story  Pope Benedict was praying and
packing on Tuesday two days before his move out of the Vatican
and into retirement where he will assume the title of "pope
emeritus" and still be referred to as "your holiness". Full story |
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Markets |
Euro zone shares sank to
three-month lows on Tuesday after an Italian election stalemate
renewed concerns about the future of the euro zone. . . Full story |
U.S. stocks mostly rose on
Tuesday after Federal Reserve Chairman Ben Bernanke defended the
Fed's bond-buying stimulus before Congress, but warned forced
spending cuts. . . Full story |
The euro dropped against the
dollar on Tuesday and was seen susceptible to further selling as
political gridlock in Italy caused the government's. . . Full story |
Weak banks and commodity stocks
sent Britain's top shares to a more than two-week closing low on
Tuesday after an inconclusive election result. . . Full story | |||
Uncertainty generated by
Italy's elections rattled global stock indexes and European bond
markets for a second day on Tuesday, though testimony by Federal
Reserve. . . Full story |
Gold rose decisively above $1,610
per ounce on Tuesday after testimony from Federal Reserve chief
Ben Bernanke defended its bond-buying programme, easing market
concern. . . Full story |
Major U.S. stock indexes hit
session highs on Tuesday after Federal Reserve Chairman Ben
Bernanke defended the Fed's bond-buying stimulus before Congress
and. . . Full story |
U.S. stocks rose on Tuesday,
rebounding from the previous session's steep drop over Italian
election results as investors bought beaten-down shares.. . . Full story | ||||
SA Business |
South African diversified miner African Rainbow Minerals (ARM) said it is scouting for platinum acquisitions now that the precious metal is. . . Full story |
South Africa's quarterly economic growth quickened more than expected to 2.1 percent in the closing months of 2012, boosted by the. . . Full story |
South Africa's Sibanye Gold said on Tuesday production has partially resumed at its Beatrix 4 shaft in areas that were unaffected. . . Full story |
The rand held near a one-week high and above a key resistance point in early Tuesday trade and looked likely to. . . Full story | |||
South African chemicals and explosives maker AECI posted a 24 percent fall in annual earnings on Tuesday, snapping three straight years of growth as slack demand from strike-hit mining firms weighed.. . . Full story |
Company News |
Grindrod shareholders are advised that the final results for the twelve months ended 31 December 2012, are expected to be released. . . Full story |
Shareholders are advised that the Group expects to release reviewed earnings per share and headline earnings per share for the six. . . Full story |
As announced on 3 September 2012 and again on 30 November 2012, shareholders of the company approved a specific repurchase of. . . Full story |
Shareholders are referred to the announcements released on SENS on 31 July 2012, 3 September 2012, 5 October 2012, 8 November. . . Full story | |||
Shareholders are referred to the cautionary announcement dated 11 February 2013 and are advised that as negotiations have been terminated, caution is no longer required to be exercised by shareholders when dealing in the company's securities.. . . Full story |
South Ocean's headline earnings per share for the 12 months ended 31st December 2012 is expected to be between 20% to 30% higher than for the corresponding prior year and earnings per share is expected to be between 100 cents to. . . Full story | ||||||
Company Results | Revenue for the year fell to R6.5 billion (R6.9 billion) whilst gross profit jumped to R646.9 million (R507.3 million). Operating profit. . . Full story | Revenue increased to R410.2 million (R302.8 million). Gross profit rose to R86.6 million (R52.9 million), while operating profit grew to R43.5. . . Full story | Revenue improved by 43.4% to R12 billion (R8.4 billion) and operating profit grew to R550.7 million (R480.8 million). Profit attributable to. . . Full story | Revenue for the interim period shot up to R112.9 million (R70.2 million) and operating profit was higher at R70.2 million (R27.0. . . Full story |
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Click here for the Sharenet Spot Price page
| Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
|---|---|---|---|---|---|---|---|---|
| 26/02/2013 | 127 | 211 | 71 | 409 | 206,444,936 | R11,665,240,028 | 146836 | 699794 |
| 25/02/2013 | 235 | 123 | 67 | 425 | 166,706,296 | R9,968,343,885 | 127476 | 1587227 |
| 22/02/2013 | 192 | 159 | 72 | 423 | 209,096,730 | R11,439,848,197 | 153620 | 1354888 |
| 21/02/2013 | 104 | 278 | 65 | 447 | 283,873,300 | R16,687,015,631 | 198227 | 2001455 |
| 20/02/2013 | 139 | 228 | 76 | 443 | 267,767,913 | R11,876,169,730 | 157759 | 1624209 |
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| 26/02/2013 | 15:00 | THE FOSCHINI GROUP LIMITED - Implementation of share repurchase agreement |
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