Mondi, Europe's largest craft paper and industrial bags producer, expects first-half profit to have climbed by as much as 28 per cent.

The company, which is due to report half-year results, estimates earnings for the six months through to June 30th probably increased by 25 per cent to 35 per cent.

It expects to record a net after-tax charge of approximately €36 million for the period, related mainly to the closure of plants in Finland and Spain. This charge is higher than the €16 million seen in the first half of 2014 and headline EPS is likely to grow by less (18-28 per cent).

Mondi last week issued a trading statement flagging earnings for the period to be reported. Excluding special items, underlying earnings per share will be in the range 65-70 cent.

Davy Stockbrokers last week said it had been expecting an underlying earnings per share of 62.9 cent.

“We upgraded estimates in May, mainly on the back of better volume and price assumptions in the uncoated fine paper business. At that time, we said that there were upside risks to numbers, given that we had not assumed any price increases in packaging paper or fibre packaging,” Davy said.

Mondi reported profit of €481 million last year, compared with €442 million the previous year, and said it would pay a total dividend of €0.42, an increase of 17 per cent.

“The group benefited from a general reduction in variable costs compared to the prior year . . . European wood costs were lower as a result of lower demand and currency effects,” the company said at the time.