Fundamental Facts About Mondi Plc (MNDI) To Watch Out For

  • Mar 01, 2019 GMT
  • Team Kalkine
Fundamental Facts About Mondi Plc (MNDI) To Watch Out For

Overview

Mondi Plc is a manufacturer and seller of packaging and paper products operating in regions of central Europe, North America, South Africa and Russia. Recycled containerboards, speciality kraft papers, corrugated packaging products, industrial bags, films and hygiene components, consumer goods packaging products, printed laminates and high-barrier films for the consumer industry are the products offered by the company.

Key Management Team 

  • Mr Peter Josef Oswald: CEO & Executive Director
  • Mr Andrew Charles Wallis King: CFO & Executive Director

Financial Results and Review – 1H FY2018 (€ million)

(Source: Half Yearly Report, Company Website)

Financial Commentary – H1 2018

  • The company’s reported revenue has increased to €3,727 million in first half of financial year 2018 from €3,582 million. The increase was supported by higher average selling prices across all the businesses and volume growth seen in Containerboard and Industrial Bags.
  • Underlying EBITDA of €852 million was up by 17 per cent, with a margin of 22.9 per cent, due to the good demand across our packaging businesses.
  • Operating profit of €530 million in H1 2018 was up by 4 per cent with the comparison of €508 million in the last year for the same period.
  • Pre-tax profit of €490 million in H1 2018 was up by 6 per cent with the comparison of €461 million in the last year for the same period.
  • The company’s basic underlying earnings per share was up by 26 per cent to 89.2-euro cents per share.
  • Cash flow from operating activities was €722 million for H1 2018 (2017: €612 million), reflecting a strong cash generating ability of the Group. Cash generated from operating activities was increased by 18 per cent as compared to the last year performance for the same period.
  • Return on capital employed was 21.3 per cent for six months ended 30th June 2018.
  • Capital investment projects shown good progress in H1 FY2018.
  • The interim dividend declared of 21.45-euro cents per share for six months ended 30th June 2018.

Ratio Analysis

(Source: Thomson Reuters)

 

Ratios Commentary

  • Gross margin reported was 45.50 per cent in H1 18, reflecting an increase of 1.9 per cent when compared with last year data for the same period.
  • EBITDA margin of 22.90 per cent for H1 18 stood considerably higher than the industry median of 18.50 per cent.
  • Return on equity stood at 10.20 per cent which was remarkably higher than the industry median of 4.6 per cent.
  • At liquidity front, Mondi PLC liquidity position was lower than the industry median of 1.54.
  • On leverage front, the debt-equity ratio was significantly higher as compared to the industry median, reflecting the company is more leveraged as compared to its peers.

Stock Performance

  • On 28nd February 2019, Mondi PLC shares closed at GBp 1,728.50 down by 6.31 per cent against its previous day closing price.
  • Stock’s 52 weeks High and Low is GBp 2,250.00/GBp 1,557.50. At the closing price, the share was trading 23.18 per cent lower than its 52w High and 10.98 per cent higher than its 52w low.
  • From the previous three months, Mondi PLC share price increased significantly by 1.11 per cent; and in the last one year, the stock has delivered a negative 5.02 per cent returns.
  • Stock’s average traded volume for 5 days was 1,831,089.40; 30 days - 1,385,936.23 and 90 days - 1,567,556.36. The average traded volume for 5 days was up by 32.12 per cent as compared to 30 days average traded volume.
  • The company’s stock beta was 1.46, reflecting high volatility as compared to the benchmark index.
  • Total outstanding market capitalisation was around £8.47 billion and a dividend yield of 3.78 per cent.

 

Growth Prospects and Risks Assessments

  • The company’s broad strategic risks are related to Industry productive capacity, product substitution, fluctuations and variability in selling prices or gross margins and Country risk.
  • The company’s broadly classified its financial risks as capital structure, currency risk and tax risk.
  • The company’s operational risks include cost and availability of raw materials, energy security and related input costs, technical integrity of operating assets, environmental impact, employee and contractor safety, attraction and retention of key skills and talent.
  • Proactive and comprehensive cost reduction programmes are used to mitigate the cost of the company.
  • A strong business model is being used to focus on maximising and sustaining a track record of delivering value accretive growth.
  • The group has merged its packaging paper and fibre packaging business units to achieve improved alignment and operational coordination across the fibre-based packaging value chain.

 Conclusion

The company growth prospects look favourable with an increase in the operating revenue and with increased earnings due to cost reduction programmes. The company with its robust business model is maximising and sustaining the accretive growth, and with recent reorganisation of the business units, the company is focusing more consciously on its fibre packaging business. The market can keep a watch on Mondi PLC stock going ahead.

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