Mondi’s first-quarter earnings increased 13 percent as efficiency gains and a rebound in consumer packaging demand helped offset lower paper prices, South Africa’s biggest packaging and paper firm said yesterday.

Adjusted operating profit for the three months to March rose to e183 million (R2.6 billion) from e162m a year earlier, it said. Sales were little changed.

Mondi said it was raising prices for kraftliner packaging in Europe as demand increased, while the cost of paper on the continent had declined across all grades. South African sales and a weaker rand contributed to the company’s performance in its domestic market, while energy savings helped to offset an increase in the cost of wood and recycling.

“Mondi is benefiting from energy and production efficiency gains and a modest foreign currency tailwind helping to offset lower paper prices,” Justin Jordan, a London-based analyst at Jefferies Group, said yesterday.

“Profits from consumer packaging improved sequentially, benefiting from greater fast-moving consumer goods product mix, despite muted European volume growth.”

Mondi Limited shares rallied as much as 3.3 percent to R186 on the JSE, the highest intraday price since April 7. They closed 0.8 percent up at R181.44.

The shares have gained 1 percent this year, after almost doubling last year. London-listed Mondi plc shares are flat this year.

Mondi has suffered from a 5.3 percent decline in the Russian rouble against the dollar this year, the second-worst performer of 24 emerging market currencies.

Russia accounted for 11 percent of Mondi’s production with 80 percent of that sold in the country, Jordan said.

Net debt narrowed to e1.58bn at the end of March, down e41m from year-end, the company said. – Bloomberg