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Highlights:
Mondi reports a decline in underlying core profit for Q3, attributed to planned maintenance shuts and seasonal demand fluctuations.
Underlying earnings before interest, tax, depreciation, and amortization fell to €223 million from €351 million in Q2.
The company remains focused on expansion projects, including investments in paper machines and a recent acquisition to enhance capacity in sustainable packaging.
Mondi, (LSE:MNDI) the paper and packaging group, announced on Thursday that its underlying core profit experienced a decline in the third quarter, reflecting "muted" trading conditions primarily due to an increase in planned maintenance shuts. In an update covering the three months ending September 30, the company reported underlying earnings before interest, tax, depreciation, and amortization (EBITDA) of €223 million, down from €351 million in the second quarter.
This decrease is attributed to several factors, including increased maintenance activity and a forestry fair value loss, which collectively resulted in a difference of approximately €90 million between the third and second quarters. Softer seasonal demand and rising input costs also contributed to the decline.
Despite the challenges, Mondi noted that selling prices for corrugated and flexible packaging improved compared to the previous quarter, benefiting from earlier implemented paper price increases. However, the company observed a decrease in pulp and paper selling prices for uncoated fine paper during the quarter.
Chief executive Andrew King commented on the trading landscape, stating, "While we are seeing the benefits from the increase in prices earlier this year across our key paper grades, trading conditions remain muted against the backdrop of an uncertain macroeconomic environment." He also highlighted that fewer planned maintenance shuts are anticipated in the fourth quarter, along with a normal seasonal increase in demand.
Mondi's expansion projects are progressing as planned, with investments in paper machines at its Steti and Duino facilities on track for completion. The company’s organic growth initiatives are expected to generate a significant EBITDA contribution starting in 2025. Additionally, the recent acquisition of the Western European assets of Schumacher Packaging aims to enhance Mondi's capacity, positioning the company to capitalize on the structural growth opportunities in sustainable packaging.
