Mondi, Europe's largest kraft paper and industrial bags producer, raised its final dividend as full-year profit gained 8.8 per cent.

Profit excluding one-time items increased to €481 million in 2014, or 99.5 cents per share, compared with €442 million the previous year, the Johannesburg-based company said in a statement on Tuesday.

The average estimate of 9 analysts surveyed by Bloomberg was 102.6 cents per share.

The company will 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,” the company said in the statement. “European wood costs were lower as a result of lower demand and currency effects.”

Mondi, a supplier of wood pulp, packaging and paper products, is focusing on emerging markets including China to reduce reliance on developed economies. The decision to raise the dividend comes as the company plans to continue spending on plants and new projects. The shares gained 0.7 per cent to 230.99 rand as of 9:33 a.m. in Johannesburg.

Bloomberg