Packaging giant Mondi Plc (GB:MNDI) reported a 55% growth in underlying earnings of €450 million, driven by higher selling prices combined with higher volumes.
Higher prices helped the company to mitigate the effects of rising costs on profits. The company struggled with high input costs in the quarter based on stronger wood and energy prices.
The company was, however, able to deal with higher costs as it generates most of its energy demand internally in its mills. Such cost-control initiatives help Mondi to navigate smoothly through inflationary pressures.
Mondi’s previously announced capital investment programme is on track, under which, it is looking at increasing the production capacity to drive more growth. As part of this, the company invested €400 million in a new kraft paper machine at Steti mill in the Czech Republic. It also agreed to acquire the Duino mill near Trieste, Italy.
The shares gained some momentum and were trading around 2% higher during the day. Mondi’s shares have fallen by 21% this year so far.
What does Mondi Plc do?
Mondi manufactures and sells sustainable packaging and paper solutions. The company has three business segments: corrugated packaging, flexible packaging, and uncoated fine paper.
Is Mondi Plc a good buy?
According to TipRanks’ analyst rating consensus, Mondi has a Strong Buy rating, based on four Buy recommendations.
The MNDI price target is 1,842p with an upside potential of 31.5%. The analyst price targets range from a low of 1,800p to a high of 1,900p.
Conclusion
Looking ahead, the company is optimistic about a strong year of results despite macroeconomic uncertainties.
The company has an advantage of better cost management and a profitable product portfolio, which makes it well-placed for future growth.
