Mondi, the England-based global packaging and paper producer, saw its share price slide 6.6% on the JSE yesterday afternoon after it said challenging market conditions persisted in the three months to September 30, and selling prices had fallen.
“Market demand has remained soft with lower average selling prices largely mitigated by lower input costs and tight fixed cost control,” its directors said in the trading statement.
The firm reported a 42% plunge in underlying earnings before interest, tax, depreciation and amortisation to €261 million (R5.3 billion) for the third quarter that ended September 30, from €450m in the same quarter last year.
Compared to the second quarter to June 30, underlying Ebitda dropped 21% from €329m.
“Demand has remained subdued in the third quarter with stable pricing in container board, but continued price declines in kraft paper. We expect this trend to continue through the final quarter of the year along with stabilising input costs and a greater impact from maintenance and project-related shuts,” CEO Andrew King said in a statement.
In Corrugated Packaging, container board prices were stable with order books improving.
Flexible Packaging saw further price and volume declines in kraft paper. The converting network delivered a resilient performance.
Uncoated Fine Paper pricing continued to decline in Europe on weakness in demand.
Southern Africa markets remained stable.
The forestry fair value gain, accounted for within uncoated fine paper, was €14m in the third quarter, much lower than €72m in the second quarter.
King said their low-cost asset base, broad product offering and integrated business model provided resilience in this environment and ensured they were well positioned to benefit when markets improved.
The €1.2 billion capital projects pipeline was on track and within budget.
“We remain confident in the structural growth of the packaging markets we serve, underpinned by a growing demand for sustainable packaging solutions, and continue to invest in the future growth of Mondi,” he said.
In its financial 2022, Mondi had revenues of €8.9bn and underlying Ebitda of €1.8bn.
BUSINESS REPORT