UPDATE 1-Mondi swings to H1 profit, sees strong H2

* HEPS at 24.8 euro cents vs loss of 0.8 cents last yr

* Revenue up 16 pct to 3.03 billion euro ($4.03 billion)

* Sees strong H2 performance

(Adds details, quotes)

By Olivia Kumwenda

JOHANNESBURG, Aug 10 (Reuters) - Paper maker Mondi (MNDJ.J) on Tuesday reported a return to half-year profit helped by better demand and prices, and said its expects a strong second half owing to rising prices in Europe.

South Africa's Mondi, which is also listed in London (MNDI.L), said demand and prices rose across all of its paper grades, and its South African division was also improving.

"Mondi achieved a pleasing result in the period against a backdrop of improving market conditions, supported by a particularly strong performance from the European uncoated fine paper business," Chief Executive David Hathorn said.

Mondi's headline earnings per share for the six months to end-June rose to 24.8 euro cents from a loss of 0.8 euro cents a year earlier. Headline EPS is the main profit gauge in South Africa and strips out certain one-off, financial and non-trading items.

"Despite cost pressures, the positive pricing momentum witnessed in Europe since the beginning of the fourth quarter of 2009 in most of the group's key grades should see the business continue to deliver a strong performance in the second half," Hathorn said.

He warned that outlook for the South African division was still uncertain, despite actions to improve profitability.

"Much depends on the outlook for the rand and export pulp prices," he said.

The global paper industry has struggled to emerge from a near decade-long slump caused by soft demand and overcapacity, made worse by last year's recession which knocked down advertising spending, but the packaging segment of the industry had started to recover.

Mondi, mainly involved in the manufacture of packaging paper with operations across 31 countries, said underlying operating profit was up 61 percent to 222 million euros ($294.8 million).

Revenue was up 16 percent to 3.03 billion euros.

Mondi bought Smurfit Kappa's (SKG.I) industrial and consumer bag operations in Western Europe in April this year and sold all three of its UK-based corrugated box plants to Smurfit, in a move to strenghthen its market position in Europe and cut debt. [ID:nLDE63I0UX]

The group also concluded a deal to sell its shares in Europapier, a paper merchant business, to the Heinzel Group in May. [ID:nWEA0113]

Mondi declared an interim dividend of 3.5 euro cents per share, compared with 2.5 cents in the same period last year.

Mondi's peers Sappi (SAPJ.J), UPM-Kymmene's (UPM1V.HE) and Stora Enso (STERV.HE) have also posted better earnings helped by improving demand. [ID:nLDE67102J] [ID:nLDE6710WQ] [nLDE66J1H7] (Reporting by Olivia Kumwenda)