JOHANNESBURG (Reuters) - Mondi, the biggest producer of office paper in Europe, said on Wednesday half-year headline earnings per share fell 104 percent to 0.8 euro cents, hit by lower prices in its main products.
The South African paper maker, which declared an interim dividend of 2.5 euro cents per share, said underlying operating profit was down 48 percent to 138 million euros.
Headline EPS is the main profit gauge in South Africa and strips out certain one-off, financial and non-trading items.
Operational cash inflow of 392 million euros was 26 percent higher than the prior period due to the strong performance of its European uncoated fine paper business and pretax profit fell 61 percent to 81 million euros.
The global paper industry has struggled for six years to climb out of a slump, burdened by overcapacity and soft prices, and the global economic crisis has further dimmed its prospects for 2009 with demand falling even lower.
"The full impact of the price declines in our main products over the course of the first half is now being felt," Mondi Group chief executive David Hathorn said, adding the impact would continue to pose challenges in the near term.
Paper producers slashed output last year to try to bring supply in line with demand, and have said they are prepared for more reductions as the global slowdown bites.
"We believe the decisive actions taken to reduce capacity, lower the overall cost base and optimise cash flows, coupled with our high-quality, low-cost asset base leave us well positioned to benefit when market conditions improve," Hathorn said.