Stock of the week: Mondi
International packaging and paper group Mondi is involved at every stage of development, from growing the trees, right through to the final product. It has factories in Russia, South Africa, Central Europe and the Americas. The shares jumped last week following a solid trading update in which the company stated that strong contributions from the consumer division, uncoated fine paper and the South African market offset the impact of lower selling prices in certain packaging paper segments.
Mondi has wide product diversification and investors should appreciate that prices for Mondi’s products have held up relatively well, while manufacturing costs remain relatively low. These are good times for the company as demand for consumer packaging continues to increase around the world, on the back of online shopping and supermarkets, which should be viewed as a positive.
In 2013 the group moved into the FTSE 100, which may have come as a surprise to some FTSE followers, as this is not a well-known company. We believe the company deserves to have a higher profile and we subsequently recommend Mondi as a ‘buy’ for medium risk investors with a balanced portfolio.