International packaging and paper group Mondi’s underlying earnings a share improved to 75c apiece for the six months ended June 30, up from 67.8c in the six months to June 2015.

Its profit after tax increased from €313-million in the six months to June 2015, to €390-million in the period under review.

“We saw strong contributions from consumer packaging, uncoated fine paper and the South Africa division, driven by volume growth, pricing benefits and forestry fair value gains, respectively.

“This was partially offset by packaging paper, which was negatively impacted by lower average selling prices, and fibre packaging, which saw lower sales volumes and experienced negative currency effects,” Mondi CEO David Hathorn said in a statement on Thursday.

Revenue was down 4%, from €3.54-billion in the first half of 2015 to €3.31-billion in the first half of this year, primarily owing to currency effects and disposals completed in 2015. Excluding these effects, revenue grew 1%.

Like-for-like sales volumes were similar to the comparable prior year period, with generally stable volumes in the paper businesses and strong volume growth in consumer packaging, offset by lower sales volumes in the industrial bags and extrusion coatings segments of fibre packaging.

Input costs were generally lower in Mondi’s Europe & International business. Wood, fuel and energy input costs were lower than the comparable prior year period, enhanced by the benefits of the green energy investments at Swiecie mill, in Poland, that were completed in the second half of 2015.

Average benchmark paper for recycling costs was up 13% on the comparable prior year period, at similar levels to the second half of 2015.

In the South Africa division, higher domestic wood costs and inflationary increases contributed to higher variable costs in local currency terms, partially offset by higher energy sales.

A significantly higher fair value gain on forestry assets reduced the net cost base in South Africa.

The group noted that although it had experienced some price weakness in certain of its packaging grades in the first half of this financial year, demand for these products remained strong and pricing had generally stabilized, with increases recently achieved in certain grades.

The second half of the year is expected to be impacted by planned maintenance shuts at a number of Mondi’s mills and the usual seasonal downturn in its uncoated fine paper business.

Meanwhile, Mondi said it continued to make good progress in driving growth through its capital investment programme.

“We are on track to deliver an anticipated €60-million in incremental operating profit in 2016 from recently completed major capital projects, and our projects in development remain on time and on budget,” the company stated.

The ongoing projects include the €94-million second phase of investment at the Swiecie mill, to provide 100 000 t of additional softwood pulp capacity and 80 000 t of lightweight kraftliner; the upgrade of the woodyard project to provide capacity to produce unbleached kraftliner at Richards Bay, in South Africa; and other investments in modernizing and expanding Mondi’s fibre and consumer packaging production facilities.

During the six months to June 30, Mondi’s board had approved the €310-million investment in a new 300 000 t/y kraft top white machine at the Ružomberok mill, in Slovakia, but the project was still to obtain approval of tax incentives from the European Commission, as well as necessary permitting.

The board also approved the first phase of the modernization of the Steti mill, in Czech Republich, which will include a new woodyard and bleaching line to be implemented at a cost of €41-million. Further investments in the mill, including the possible replacement of the recovery boiler, are under evaluation.

Mondi expects its capital expenditure to be between €400-million and €450-million in 2016/17.