Mondi shares slump on Q1 earnings, Iran volatility warning

(Sharecast News) - Paper and packaging firm Mondi on Friday said it was raising prices and cutting jobs in response to increased volatility caused by the US-Israel war on Iran and Lebanon, sending shares in the firm sharply lower.

The company said it expected the impact of the increases to take full effect in the third quarter of this year.

It also reported a sharp fall in first quarter underlying earnings as market conditions remained "challenging" and had move to cut costs by axing 450 jobs over the course of the year and shutting plants. Mondi shares were down 7% in early trade.

Underlying core earnings came in at �212m, down from �290m a year earlier. Mondi added that the Iran war had "further increased volatility in an already complex operating environment" leading to increased energy, raw material and logistics costs.

"There's no papering over the cracks in packaging outfit Mondi's latest update. The business is heavily exposed to rising energy and raw materials costs and that's putting significant pressure on profit," said AJ Bell investment director Russ Mould.

"Management can take some credit for an increase in volumes which suggests Mondi is making progress on items within its compass to control.

"Mondi is now down more than 60% over the last five years as demand has eased back and the company has battled waves of inflationary pressure. The immediate outlook suggests (it) will have to run hard just to stand still."

Reporting by Frank Prenesti for Sharecast.com