Latest Business Updates Unveiled by Two LSE Stocks - Mondi Plc and Essentra Plc

Summary

• Mondi Plc's EBITDA for Q3 2020 declined by 20% year on year in Q3 20.
• The underlying EBITDA is expected to be down by around €100 million in FY2020 due to the planned mill maintenance.
• Essentra Plc reported a revenue decline of 6.7% year on year in Q3 2020.
• The Company cancelled the interim dividend for FY2020.

Mondi Plc (LON:MNDI) and Essentra Plc (LON:ESNT)  are LSE listed industrial material stocks. Shares of MNDI and ESNT were up by around 0.41% and 0.84%, respectively from the last closing price (as on 23 October 2020, before the market close at 1:30 PM GMT+1).

Will Mondi Plc be able to meet the expectations?

Mondi Plc is a FTSE 100 listed holding company, which is a global leader in packaging and paper, contributing to a better world by making innovative packaging and paper solutions that are sustainable by design.

(Source: Company Presentation)

Q3 20 trading update as reported on 15 October 2020

As per the update released on 15 October 2020, the Company posted an underlying EBITDA of €306 million in Q3 20, which was down by 20% year on year. The performance was impacted due to a lower average selling price and negative currency effects. Compared with Q2 20, the underlying EBITDA was down 13%. In Q2 20, the underlying EBITDA was €353 million.

Financial Highlights (for the six months ended 30 June 2020)

In H1 FY20,  revenue was down by 8% year-on-year to €3,452 million. Similarly, net profit fell by 25% to €349 million in H1 FY20 against €464 million in H1 FY19. Regarding the financial position, the Company has robust liquidity of €1.4 billion as on 30 June 2020.

(Source: Company Presentation)

Share Price Performance Analysis of Mondi Plc

(Source: EODHD/Others, chart created by Kalkine Group)

Shares of Mondi Plc were trading at GBX 1,597.00 and were up by close to 0.41% against the previous closing price (as on 23 October 2020, before the market close at 1:30 PM GMT+1). MNDI's 52-week High and Low were GBX 1,794.00 and GBX 1,156.50, respectively. Mondi Plc had a market capitalization of around £7.73 billion.

Business Outlook

During the full year, Mondi expects the planned maintenance to have a cost impact of €100 million on the EBITDA with a cost of €55 million expected in Q4 FY20. In the Q4 20, the Company expects the start of kraft paper production for shopping bags in Steti, and the additional capacity would be around 75,000 tonnes, and that is a significant step towards sustainable packaging.

Is Essentra Plc well-positioned for recovery?

Essentra Plc is a FTSE 250 listed Company, leading global provider of essential components and solutions. The Company operates through three segments: Components, which is a global market manufacturer and distributor of plastic injection moulded, vinyl dip moulded and metal items; Packaging, which is a supplier of a full secondary packaging range to the health and personal care sectors; and Filters, which is the global independent supplier of cigarette filters & related solutions to the tobacco industry. Since 6 June 2005, it has been listed on the London Stock Exchange.

(Source: Company's Website)

Q3 20 trading update as reported on 23 October 2020

• As per the update released on 23 October 2020, the Company continued to maintain the same improving trading trends in Q3 as it was seen in Q2. Revenue declined in Q3 by 6.7% compared to the prior year, on a like for like basis.
• Component division declined in Q3 by 13.9% YoY while Q2 was down 20% on a like for like basis. German warehouse has recently become fully operational. The Packaging division has had a weaker Q3 resulting in a revenue decline of 8.5% YoY, with softness seen in certain end markets owing to a reduction in the levels of prescriptions and elective surgeries through lockdown periods. However, recent order book trends have been somewhat improving, as the pharmaceutical and beauty markets start to recover slowly. The Filters division has maintained robust underlying demand throughout the pandemic in Q3, with revenue growth of 2% YoY.
• All 72 manufacturing and distribution facilities have been operational throughout Q3, with service broadly back to pre-pandemic levels.

Acquired 3C! Packaging, Inc

• On 17 September 2020, the Company announced that it acquired 3C! Packaging for USD 65 million. The transaction amount was paid in cash for the entire issued capital of the Company. 3C! is a US-based company that is engaged in designing and manufacturing of folding cartons, packaging material and foil. The Company mainly caters to the pharmaceutical and healthcare sector.
• The current acquisition price is based on 5.7x multiple on the adjusted EBITDA of USD 7.3 million for the year ended 30 June 2020. The price also includes an expected synergy cost of around USD 4 million.

H1 FY20 results (ended 30 June 2020) as reported on 28 August 2020

In H1 FY20, revenue plunged by 11% year-on-year to £448 million. Similarly, net profit plunged by 78% to £7 million against £32 million in H1 FY19. In H1 FY20, the net debt increased by 23%  to £238 million and net debt/EBITDA moved up from 1.6x in H1 FY19 to 2.5x in H1 FY20.

(Source: Company Report)

Share Price Performance Analysis of Essentra Plc

(Source: EODHD/Others, chart created by Kalkine Group)

Shares of Essentra Plc were trading at GBX 265.40 and were up by around 0.84% against the previous closing price (as on 23 October 2020, before the market close at 1:30 PM GMT+1). ESNT's 52-week High and Low were GBX 459.13 and GBX 206.80, respectively. Essentra Plc had a market capitalization of around £794.03 million.

Business Outlook

The macroeconomic environment continues to remain uncertain. The HY 2020 interim dividend is cancelled. Barring a material disruption from a second wave to the COVID-19 pandemic, and based on recent trading, the Board's expectations for the year ending 31 December 2020 remain unchanged. On a divisional basis, the outlook for H2 suggests that; Components will see a continuation in the improvement on LFL trends, Filters will see a continued trend of year-on-year growth driven in part by outsourcing contract volumes, and in Packaging – due to some recent softness seen in certain end markets owing to a supply chain adjustment resulting from a reduction inprescriptions and surgeries through lockdown periods - Q3 should be broadly flat with a return to growth anticipated for Q4.