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Mondi warns rise in UK packaging prices as pound tumbles

Mondi warns rise in UK packaging prices as pound tumbles.

Mondi warns rise in UK packaging prices as pound tumbles

Global suppliers such as the South African paper and packaging giant usually insert clauses into contracts allowing for price recalculations in light of currency fluctuations.

“We export many of our products from Europe to the UK and most of these contracts have currency agreements in place, so they have been repriced to take in the currency movements,” he said.

This price increase could eventually hit consumers.

Mondi has seen an improvement in profits – operating profits rose 3% to €227m (£205m) in the third quarter, compared to the same period last year.

This was after a turbulent second quarter which saw a 12% dip in operating profits.

Energy costs were down on the comparable prior year period due to lower energy prices and the benefits of various energy efficiency investments.

Since June 30 the company’s sales volumes were in line with last year, and its costs for components such as wood and chemicals had remained stable during the period.

Additionally, the average cost per tonne of paper for recycling was up 8% on the comparable prior year period and up 10% on the second quarter.

Mondi’s €450m investment and modernisation programme to upgrade its equipment is expected to contribute less to its operating profits than previously forecast – some €50, down from €60m.