You are here: Home - Investing - Experienced Investor - News -

Stock of the week: Mondi

Written by:
Ian Forrest, investment research analyst at The Share Centre, picks Mondi as stock of the week.

This week’s stock of the week is Mondi, an international packaging and paper group involved at every stage from growing the trees through to the final product. With operations across more than 30 countries, predominantly in central Europe, Russia and South Africa, the group enjoys a global reach. Its production in emerging markets generally leads to less pressure on costs.

A positive first quarter trading update in May reported a 15% increase in operating profit. Costs were higher this year than previously but this was offset by higher average selling prices for its key paper grades.

While recent mill maintenance closures have posed a cause for concern, the group has invested in new and existing plants which have led to improved efficiency. As a result, profit margins have improved and net debt has fallen.

Currency movements had a net negative impact on operating profit compared to the previous year, mainly owing to a weaker US dollar and Russian rouble relative to the euro. Inflationary cost pressures have also increased and conditions remain challenging for its consumer packaging division.

Nonetheless, demand for the majority of its products continues to increase around the world, on the back of online shopping and changing social trends, which should be viewed as a positive. The shares trade on a prospective P/E rating of around 134 and the company deserves to have a higher profile.

Due to its positive results and optimistic outlook, we recommend Mondi as a ‘buy’ for a medium risk balanced portfolio.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
‘Girl fund’ launches to invest in gender diverse companies

Legal & General Investment Management (LGIM) has unveiled a ‘Girl fund’ which will allocate more to companies achieving higher levels...