Mondi Half-yearly report 2011

From the CEO

The good result achieved in positive market conditions confirms the validity of our strategy. All operations are running well and our recent major investments have made a meaningful contribution to the Group’s profits.

The successful completion of the Mpact demerger endorses the strategies of both Mondi and Mpact, allowing both businesses to pursue their increasingly divergent strategic priorities and focus on their respective growth opportunities.

In the Europe & International Division, following a period of strong demand order books remain good but are somewhat softer, having returned to more normalised levels. As previously indicated, maintenance shuts planned at a number of the large and strongly profitable European mills will impact second half performance. The South Africa Division should benefit from improved output following the extended maintenance shut taken in the first half.

Looking further ahead, while the uncertainties in the broader macroeconomic environment continue to be a concern for demand, supply-side fundamentals in our core grades remain good. Overall, we believe Mondi remains well positioned to continue adding value for shareholders.

David Hathorn
Chief executive officer

Operational and financial highlights

Underlying operating profit up 74%, driven by a very strong performance from the Europe & International Division
Demerger of Mpact successfully completed
Refinancing of Group revolving credit facility completed
Interim dividend of 8.25 euro cents per share
Return on capital employed up to 15.2%, in excess of the Group’s through-the-cycle target of 13%

Financial summary¹

€ million, except for percentages and per share measures	Six months ended 30 June 2011	Six months ended 30 June 2010²	Half- year change %
From continuing operations
Group revenue	2,942	2,752	7
EBITDA	526	371	42
Underlying operating profit	354	204	74
Underlying profit before tax	296	164	80
Profit before tax	300	166	81
Per share measures
Basic earnings per share from continuing operations (€ cents)	39.0	19.3	102
Basic earnings per share – alternative measure³ (€ cents)	41.7	20.2	106
Basic earnings per share from total operations (€ cents)	41.6	21.5	93
Interim dividend per share (€ cents)	8.25	3.5	136
Cash generated from operations	403	269	50
Net debt	1,200	1,632	(26)
Group Return on Capital Employed (ROCE)	15.2%	9.9%

Notes:

Refer to definitions in the glossary of financial terms in the half-yearly financial statements.
Comparative information has been re-presented where appropriate to take cognisance of the discontinued operation.
The directors have elected to present an alternative, non-IFRS measure of earnings per share from continuing operations. As more fully set out in note 11 of the half-yearly financial statements, the effects of the recapitalisation and the demerger of Mpact (formerly Mondi Packaging South Africa) and the Mondi Limited share consolidation have been adjusted to reflect the position as if the transaction had been completed at the beginning of each period presented. This will enable a useful comparison of earnings per share from continuing operations, based on the consolidated number of shares.