Every parent’s ambition is to equip the fruit of their loins with the tools to fly once they have left the nest, so the suits over at Anglo must be brimming with pride at the success of Mondi since it demerged from the mothership in 2007 and sailed off under its own steam. Mondi has become a global powerhouse, with 26,000 employees in 30 countries, and its latest results paint a picture of a machine humming along remarkably effectively.
Mondi’s success in the past year was largely driven by getting the basics right, with a strong operational performance delivering productivity gains backed up with a sharp focus on cost containment. Demand was solid in the packaging businesses, and any regular user of Amazon would suspect the future of the sector must be remarkably rosy due to the e-commerce giant’s apparent determination to send the smallest of orders in a box the size of a fairly serviceable coffin.
In its results announcement, Mondi places particular emphasis on the importance of sustainable packaging, pointing out that its position as a manufacturer of both paper and flexible plastic packaging gives it a unique position to create solutions for forward-thinking brands whose customers are demanding an altogether more sensible approach to packaging to minimise its impact on the planet.
Mondi is one of the first signatories of the new plastics economy global commitment, which by 2025 aims to see 100% of plastic-based packaging being reusable, recyclable or compostable, and 25% made from recycled content, which would represent a huge step forward if it’s achieved.
There’s no doubt that the local retail market is decidedly red in tooth and claw at present, with punters looking in the cracks of the sofa to find a little disposable income to supplement the gaping void in their wallets.
This means retailers will be slashing margins to the bone as they chase what little spending there is to be had, and while it may dent performance across the board in the short term, going all Darwinian will benefit the strongest operators as they wave a tearful farewell to the weak.
Massmart is undoubtedly a robust operation, but it hasn’t covered itself in glory in the past year.
Clearly the major issue was the macro retail environment, but of the matters that were in its direct control, the decision to move the head offices of Massdiscounters and Masscash up to Joburg from Durban had a considerably disruptive effect in the period.
The move is expected to result in R52m of annualised savings for the group, and there is clear logic in having senior leadership in one place, but it appears to have gone down badly with fans of a sultry tropical climate and easily accessible surf.
The company remains cautious about the outlook for the SA retail environment, and is stepping up its march into Africa, concentrating on opportunities in Kenya and Zambia. It is looking to expand and refine its online presence, where sales grew by 56% in the year.
The good news is that its exceptionally low cost base will allow it to bounce back when the local consumer market picks up.
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