Mondi Limited
(Incorporated in the Republic of South
Africa)
(Registration number: 1967/013038/06)
JSE share code: MND ISIN: ZAE000156550
Mondi plc
(Incorporated in England and
Wales)
(Registered number: 6209386)
LEI: 213800LOZA69QFDC9N34
JSE share code: MNP ISIN: GB00B1CRLC47
LSE share code: MNDI
As part of the dual listed company structure, Mondi Limited and
Mondi plc (together ‘Mondi Group’ or ‘Mondi’) notify both the JSE
Limited and the London Stock Exchange of matters required to be
disclosed under the Listings Requirements of the JSE Limited and/or
the Disclosure Guidance and Transparency and Listing Rules of the
United Kingdom Listing Authority.
Mondi Group: Trading update
9 May 2019
This trading update provides an overview of our financial
performance and financial position since the year ended
31 December 2018, based on management
information up to 31 March 2019 and
estimated results for April 2019.
These results have not been audited or reviewed by Mondi’s external
auditors.
Reviewed results for the half-year ending 30 June 2019 will be published on 1 August 2019.
Except as discussed in this update, there have been no
significant events or transactions impacting either the financial
performance or financial position of the Group since 31 December 2018 up to the date of this
statement.
Group performance overview
The Group delivered a strong performance in the first quarter,
driven by a combination of higher average selling prices, a strong
operational performance, the contribution from acquisitions and
expansionary capital expenditure projects completed in 2018, and
lower planned maintenance shut costs. Underlying EBITDA for the
first quarter of €471 million was 16% above the comparable prior
year period (€405 million), and 6% up on the fourth quarter of 2018
(€446 million).
Like-for-like sales volumes were marginally lower than the
comparable prior year period and higher than the previous quarter.
Selling prices for the Group’s key paper grades were, on average,
higher than the comparable prior year period and stable on the
previous quarter.
Costs were marginally higher than the comparable prior year
period and flat on the previous quarter. Among key input costs,
wood, energy and chemical costs were higher than the comparable
prior year period. The notable exception was paper for recycling
costs, where, as a result of changes to Chinese import policies,
average benchmark European prices were down 24% compared to the
first quarter of 2018. Cash fixed costs were marginally higher than
the prior year, largely as a result of inflationary cost pressures,
mitigated by our cost containment initiatives.
Currency movements had a net neutral impact on underlying EBITDA
versus the comparable prior year period, as the effects of weaker
Russian rouble and Turkish lira were offset by a stronger US dollar
and weaker South African rand relative to the euro. When compared
to the fourth quarter of 2018, currency movements had a small net
positive impact mainly as a result of the stronger Russian rouble
relative to the euro.
The estimated impact on underlying EBITDA of maintenance shuts
completed during the period was around €15 million (2018: €35
million). Based on prevailing market prices, we estimate that the
impact of maintenance shuts on underlying EBITDA for 2019 will be
around €150 million (2018: €110 million), in line with our previous
estimate, of which around €90 million will be incurred in the first
half of the year (H1 2018: €55 million).
Business unit overview
Fibre Packaging benefited from higher average kraft paper
selling prices following price increases implemented through the
second half of 2018 and early 2019. Price reductions were seen in
containerboard during the period, which continued into the second
quarter. The magnitude varies by grade, with limited reductions
seen in semi-chemical fluting and white-top kraftliner.
Corrugated Packaging and Industrial Bags benefited from higher
selling prices versus the comparable prior year period. Volumes in
Corrugated Packaging were up in Europe year-on-year, offset by weaker volumes
in Turkey and Russia. Like-for-like volumes in Industrial
Bags were down, due to a combination of pricing discipline and
weakness in selected regional markets.
In Consumer Packaging, we saw further improvement in the
subsegment of consumer goods packaging as it benefits from a
restructured plant network and continuous improvement initiatives.
As anticipated, we have also seen a stabilising of performance in
personal care components, which has been under pressure from
declining volumes. We continue to work actively with our customers,
suppliers and other stakeholders to develop fully recyclable
plastic-based packaging and solutions with increased recycled
plastic content.
Uncoated Fine Paper continues to perform strongly, with
higher average selling prices on the prior year period more than
offsetting higher costs and modestly lower volumes. Prices were, on
average, stable on the previous period.
Capital investment projects
The €335 million modernisation project at our Steti mill
(Czech Republic), commissioned in
the fourth quarter of 2018, is operating according to plan. We are
also making good progress on our previously announced major capital
investment projects at our Ruzomberok (Slovakia), Syktyvkar (Russia) and Steti mills and the smaller
expansionary projects at a number of our packaging operations.
Cash flow and financing activities
Strong cash generation from operating activities more than
offset the cash outflows related to our capital expenditure
programme and financing activities, resulting in reduction in net
debt during the quarter.
Net finance costs were slightly higher than the comparable prior
year, as the benefit from a lower effective interest rate was
offset by higher average net debt during the period.
There have been no significant changes in the Group’s borrowing
facilities since 31 December
2018.
Outlook
We have positioned the Group to benefit from the key industry
trends of sustainability, e-commerce and enhancing our customers’
brand value. While macro-economic uncertainties remain, our focus
on delivering value accretive growth and our performance-driven
culture means we are confident of continuing to deliver a strong
and industry leading performance.
Contact details:
Mondi Group |
|
Andrew King
Group CFO |
+44 193 282 6321 |
Clara Valera
Group Head of Strategy and Investor Relations |
+44 193 282 6357 |
Kerry
Cooper
Senior Manager – External Communication |
+44 193
282 6323 |
FTI Consulting |
|
Richard Mountain |
+44 790 968 4466 |
Conference call dial-in details
Please see below details of the dial-in conference call that
will be held on 9 May 2019 at 7:30
(UK) and 8:30 (SA).
The conference call dial-in numbers are:
South
Africa
0800 014 553
UK
0800 376 7922
Other
+44 207 192 8000
Conference code: 6943977
Should you have any issues on the day with accessing the dial-in
conference call, please call +44 207 192 8000.
A replay facility will be available until 23 May 2019. The dial in details are:
South
Africa
0800 014 706
United
Kingdom 0808
238 0667
Other
+44 333 300 9785
Pin number: 6943977
About Mondi
Mondi is a global leader in packaging and paper, delighting its
customers and consumers with innovative and sustainable packaging
and paper solutions. Mondi is fully integrated across the packaging
and paper value chain - from managing forests and producing pulp,
paper and plastic films, to developing and manufacturing effective
industrial and consumer packaging solutions. Sustainability is
embedded in everything Mondi does. In 2018, Mondi had revenues of
€7.48 billion and underlying EBITDA of €1.76 billion.
Mondi has a dual listed company structure, with a primary
listing on the JSE Limited for Mondi Limited under the ticker MND
and a premium listing on the London Stock Exchange for Mondi plc,
under the ticker MNDI. We are a FTSE 100 constituent, and have been
included in the FTSE4Good Index Series since 2008 and the JSE's
Socially Responsible Investment (SRI) Index since 2007.
Sponsor in South Africa: UBS
South Africa Proprietary Limited.