Mondi PLC Reports Sharp Drop in Q3 Profits Amid Higher Costs and Softer Demand

2 min read | October 17, 2024 10:26 PM AEDT | By Team Kalkine Media

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Mondi PLC Reports Sharp Drop in Q3 Profits Amid Higher Costs and Softer Demand — Image source: Shutterstock

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Highlights:

Profit Decline: Mondi reported a 37% drop in Q3 profits due to higher costs, softer demand, and planned factory shutdowns.

Optimistic Outlook: CEO Andrew King expects improved performance in Q4, with fewer shutdowns and a seasonal demand increase.

Growth Plans: Mondi's expansion projects, including a recent acquisition, are on track to boost future earnings, especially in sustainable packaging.

FTSE 100-listed paper producer Mondi PLC (LSE:MNDI) experienced a near 9% drop in its share price after announcing a significant decline in third-quarter profits. The company attributed the decline to a combination of factors, including softer seasonal demand, higher input costs, and scheduled factory maintenance shutdowns.

For the quarter, underlying earnings fell by 37% sequentially to €223 million (£186 million). This decrease was largely driven by planned maintenance shutdowns, a fair value loss on forestry assets, and rising costs. Despite these challenges, Mondi’s CEO, Andrew King, remains optimistic about the company’s future performance.

King highlighted that while Mondi has benefited from earlier price increases in key paper grades, trading conditions have remained subdued due to macroeconomic uncertainties. He noted that the company expects fewer maintenance shutdowns in the fourth quarter, along with a typical seasonal boost in demand.

Additionally, King reaffirmed Mondi’s commitment to its growth projects, which remain on schedule despite setbacks earlier this year, including losing a bidding war for DS Smith. He emphasized that these investments, coupled with the recent acquisition of cardboard box-making assets from Schumacher Packaging, will help Mondi take advantage of the growing demand for sustainable packaging solutions.

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