S.Africa's Mondi Q1 profit rise on higher sales, shares up

(Recasts with share price rise)

By Zandi Shabalala

JOHANNESBURG, May 13 (Reuters) - Shares (Frankfurt: DI6.F - news) in paper maker Mondi hit record highs on Wednesday after reporting a 29 percent rise in first-quarter operating profit on higher sales, lower costs in its main European market and improved prices in Russia and South Africa.

Mondi (LSE: MNDI.L - news) 's shares rose 9 percent each to 266 rand, their highest level since the firm first listed in 2007, making it the biggest gainer on Johannesburg's All-Share (LSE: SHRE.L - news) index.

The South African company said in a statement that contributions from capital projects and acquisitions also helped boost its underlying operating profit to 236 million euros ($266 million) for the three months to end-March compared with 183 million euros in the corresponding period a year ago.

Mondi, which is also listed in London, said the returns were 9 percent above Mondi's 2014 fourth quarter operating profit 216 million euro.

The company said that on a like-for-like basis, sales volumes were up across most businesses on both the comparable prior year period and the previous quarter.

The strengthening of the dollar versus the euro provided a net benefit to the company which also makes office paper and cement bags, partly through dollar-denominated sales.

The cost of wood, recycling paper, resin, energy and chemicals were all lower than the comparable period, Mondi said, but warned that inflationary pressures in some of the emerging markets where it operates are expected to increase.

"In addition, the recent recovery in the oil price is expected to negatively affect the cost of energy, resin and chemicals," the company said.

The global price of oil has risen, supported by bets that U.S. crude stockpiles will fall.

Mondi has been struggling with lower prices for its paper products and lower global demand but has kept its head above water through acquisitions and increasing prices.

($1 = 0.8880 euros) (Editing by James Macharia)