Mondi - Strong Q3 performance provides scope for full year upgrades

Davy Research
/Read Important Disclosures

Mondi’s positive Q3 trading update addresses a number of the concerns raised in recent weeks which have weighed on its share price (and those of its peers). Product pricing, the key driver of profits, remains at historically high levels. Demand remains strong across most businesses, with particular strength in kraft paper. Cost inflation is “manageable”, with OCC costs expected to stay at current low levels. In this environment, the risk to earnings is firmly to the upside for this year and next. In this context, the recent sell-off looks overdone.