JOHANNESBURG (Reuters) - Packaging and paper group Mondi (L:MNDI), (J:MNDJ) reported a 25 percent increase in half-year underlying profit, benefiting from higher average selling prices, good demand across its packaging businesses and profit improvement initiatives across the group.

Mondi has been battling negative currency effects from a weaker U.S. dollar and a weaker Russian rouble while also facing higher raw materials costs and the impact of maintenance shut-downs.

The company said on Friday that its fibre-based packaging business, comprising packaging paper and fibre packaging, was the main contributor to the improved performance.

Underlying operating profit rose to 630 million euros (£560.85 million) in the six-months ended June, up from 503 million euros earlier, Mondi said.

The company said it was making progress with plans to boost growth and ensure the ongoing "cost competitiveness" of its operations via a major capital expenditure programme of over 750 million euros.

The investment project aims to increase capacity at its paper mills and secure organic revenue from 2019 onwards by catering to higher demand in container and corrugated packing and some areas of consumer packaging.

"With our robust business model ... we remain confident of sustaining our track record of delivering value accretive growth," Chief Executive Peter Oswald said.

The group, which is listed in London and Johannesburg, declared an interim dividend of 21.45 euro cents per share, up 12 percent.