Mondi posts loss after weak demand forces writedowns

Feb 26, 2009. /Lesprom Network/. Mondi Ltd., Europe’s largest producer of kraft paper, reported a full-year loss after falling demand forced the company to take charges of Euro 387 million, as Bloomberg informed Lesprom Network. The net loss for the year ended December 31 was Euro 211 million compared with a profit of 233 million a year earlier, the company said in a statement. Sales rose to Euro 6.35 billion from Euro 6.27 billion. Mondi, which sells more than half its production in Europe, is closing mills in England, Hungary and Denmark as rising costs and overcapacity in Europe hurt profit margins at papermakers. The company on February 16 announced one-time costs of Euro 285 million for writedowns and shuttering production. “Given the level of global economic uncertainty that emerged in the latter part of 2008, the outlook inevitably remains challenging,” Mondi said in the statement. The company is “well positioned to benefit when market conditions improve,” and it remains “confident in the medium and long- term prospects.” Mondi cut 12% of capacity in the last quarter of the year, equivalent to 130 thousand metric tons, and for the full-year halted 212 thousand tons of production in response to price weakness and low demand. In total, Mondi has closed about 600 thousand tons of “high cost production capacity,” it said.