Bloomberg News

Mondi Rises on Competitor’s Packaging Unit Gains

July 21, 2010

Mondi Ltd. (MND), Europe’s largest maker of office paper, rose the most since May after competitor Svenska Cellulosa AB (SCAB) reported second-quarter profit that beat analysts’ estimates.

Mondi climbed 6.2 percent, the biggest gain since May 10, to close at 50 rand in Johannesburg.

SCA “reported a very good packaging result,” Lars Kjellberg, an analyst with Credit Suisse who has an “outperform” recommendation on Mondi, said in an interview today. SCA posted operating profit of 306 million kronor ($41.5 million) for its packaging division, up from 11 million kronor a year earlier. Johannesburg-based Mondi is Europe’s fourth- largest producer of corrugated packing.

The surprise earnings and improved outlook for more price increases at SCA “is clearly supporting” Mondi’s gains, Kjellberg said. SCA expects further margin improvement, he said, adding “Mondi’s margin progression should be better.”

SCA posted net income of 1.44 billion kronor, from 1.17 billion kronor a year earlier. That exceeded the average estimate of 1.11 billion kronor in a Bloomberg survey of nine analysts.

To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net


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