DURBAN - Mondi's share price tumbled by more than 4percent on the JSE yesterday the global packaging and paper group reported that its underlying earnings before interest, tax, depreciation and amortisation (Ebitda) fell by more than 20percent for the third quarter to end September, despite the group saying it was well-positioned for when the economic recovery takes place.
The share later closed at R343.86.
The group reported underlying Ebitda of 306million (R5.9 billion), down from 383m reported in the same quarter last year.
However, when compared to the second quarter to end June, underlying Ebitda was down by 13percent.
Mondi said good volume growth in uncoated fine paper and fibre-based packaging products and ongoing strong cost control were more than offset by the effect of planned maintenance shutdowns, negative currency effects and lower average selling prices during the quarter.
Mondi postponed most planned maintenance shut-downs to the second half of the year to protect its people from the Covid-19 outbreak and minimise execution risk.
However, it said planned maintenance shut-downs with an estimated impact on underlying Ebitda of around 35m were carried out during the quarter. “Based on prevailing market prices, we continue to estimate that the impact of planned mill maintenance shut-downs on underlying Ebitda for 2020 will be around 100m, with the fourth-quarter impact expected to be around 55m,” the group said.
Chief executive Andrew King said the decisive action they took in the early stages of the Covid-19 pandemic helped to protect their people, maintain supply of essential products and services and deliver a resilient performance. “I am pleased that sustainable packaging continues to be a focus for our customers. We continue to make good progress leveraging our award-winning innovation capabilities and customer-centric approach to optimising packaging design using ‘paper where possible, plastic when useful’,” King said.
The group’s major capital investment projects were progressing according to plan, with the 67m capital investment project to convert a containerboard machine at ttí in the Czech Republic to become fully dedicated to the production of speciality kraft paper for shopping bag applications was scheduled to be commissioned during the fourth quarter.
The group said this additional capacity of 75000 tons further supported its retail customers in their efforts to replace unnecessary plastic.
Mondi paid an interim dividend to shareholders of 237m during the quarter and said its financial position remained strong, with liquidity of around 970m.
Looking ahead the group said the macro-economic outlook continued to be uncertain, however, it was confident that it would continue to demonstrate its resilience while remaining well-positioned for when the recovery takes place.