Mondi plc
(Incorporated in England and
Wales)
(Registered number: 6209386)
LEI: 213800LOZA69QFDC9N34
LSE share code: MNDI
ISIN: GB00B1CRLC47
JSE share code: MNP
Trading update 10 October 2019
This trading update provides an overview of our financial
performance and financial position since the half year ended
30 June 2019, based on management
information up to 30 September 2019.
These results have not been audited or reviewed by Mondi’s external
auditors.
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 30 June 2019 up to the date of this
statement.
Group performance overview
As outlined in our half-year results, demand in the third
quarter remained generally softer across the markets in which we
operate and prices for key paper grades were below those of the
first half. Consequently, underlying EBITDA for the third quarter
of 2019 was €383 million, down 18% on the comparable prior year
period (€466 million) and 9% below the second quarter of 2019 (€423
million). Lower average selling prices from the highs reached
towards the end of 2018 and into early 2019, coupled with the
anticipated lower forestry fair value gain, more than offset the
benefits of our ongoing profit improvement initiatives.
Like-for-like sales volumes were, on average, marginally lower
than the comparable prior year period as a result of lower
industrial bags and uncoated fine paper volumes; this was partly
offset by growth in corrugated packaging. On average, costs were
higher than the comparable prior year period, although lower than
the previous quarter.
Planned mill maintenance shuts during the quarter had an
estimated impact on underlying EBITDA of around €40 million (2018:
€30 million). Based on prevailing market prices, we continue to
estimate that the impact of planned mill maintenance shuts on
underlying EBITDA for 2019 will be around €150 million (2018: €110
million).
We continue to make good progress on our previously announced
major capital investment projects at our high-quality,
cost-advantaged operations in central Europe.
Business unit overview
In Fibre Packaging, containerboard markets showed signs
of stabilising during the quarter following the sharp price erosion
seen in the first half of the year. While average benchmark
European containerboard selling prices were lower than the previous
quarter and significantly lower than the comparable prior year
period, the price movement during the period was limited.
Corrugated packaging saw good volume growth during the period and
continues to benefit from an innovative product offering and lower
input paper costs.
Sack kraft paper demand was generally weaker during the quarter,
in particular in export markets, impacting both pricing and
volumes. Demand for speciality kraft paper remains good, supported
by the drive to replace plastic carrier bags with paper-based
alternatives and increasing requirements for sustainable
paper-based flexible packaging. In line with expectations, price
reductions in selected kraft paper grades became effective at the
beginning of the quarter, although pricing remained above 2018
levels. We have taken downtime at certain operations in order to
manage our inventory levels in response to softer demand.
Industrial bags volumes were lower than in the comparable prior
year period, however we have seen an improvement in order books
over the past six weeks.
On 30 September 2019 we completed
the sale of a specialised extrusion coated products plant in Duffel
(Belgium).
Consumer Packaging made steady progress, benefiting from
product innovation and continuous improvement initiatives. We are
actively working with our customers, suppliers and other
stakeholders to find innovative solutions that improve the
sustainability of plastic packaging, based on circular economy
principles, leveraging our product know-how and customer
relationships across our packaging businesses.
In Uncoated Fine Paper, compared to the previous quarter,
we saw lower average uncoated fine paper prices, significantly
lower pulp selling prices and, as anticipated, a materially lower
forestry fair value gain. Strong cost control and shorter planned
maintenance shuts could only partly offset these pressures.
Outlook
As we entered the fourth quarter, prices were, on average,
marginally below those of the third quarter. If sustained, the
impact of this lower pricing is expected to be largely offset by an
easing of pressure on the cost base, supported by our ongoing
profit improvement initiatives.
The Group’s robust business model, centred around our
high-quality, cost-advantaged asset base, our portfolio of
sustainable packaging solutions, clear strategic focus and culture
of continuous improvement, gives us confidence in continuing to
deliver a strong and industry-leading performance.
Reorganisation of business
segments
To further strengthen our value chain integration, enhance our
offering in sustainable packaging solutions and improve the way we
partner with our customers, the Group will be organised across four
business units:
-
Corrugated Packaging, comprising the operations of
containerboard and corrugated solutions. Mondi is the market leader
in virgin containerboard in Europe
and the third largest supplier of corrugated packaging in emerging
Europe.
-
Flexible Packaging, comprising kraft paper, paper bags and
consumer flexible packaging operations. Mondi is a leading global
flexible packaging provider with a strong focus on paper
solutions.
-
Engineered Materials, comprising personal care components,
extrusion solutions and release liner operations. Engineered
Materials brings together leading market positions in important
specialised markets such as stretch, label and protective films as
well as extrusion coating solutions in Europe. Additionally, Engineered Materials is
the second largest commercial release liner player globally.
-
Uncoated Fine Paper remains unchanged. Mondi is the market
leader in both Europe and
South Africa.
Restated segmental information will be published during the
fourth quarter of 2019. The reorganisation has no impact on the
overall Group result.
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 10 October 2019 at
8:00 (UK) and 9:00 (SA).
The conference call dial-in numbers are:
UK
0800 376 7922
South
Africa
0800 014 553
Other
+44 2071 928000
Conference ID 5873053
Should you have any issues on the day with accessing the dial-in
conference call, please call +44 2071 928000.
A replay facility will be available until 24 October 2019 (Pin number: 5873053). The dial
in details are:
United Kingdom 0808 238 0667
South
Africa
0213 002 472
Other
+44 3333 009785
About Mondi
Mondi is a global leader in packaging and paper, delighting
its customers and consumers with innovative packaging and paper
solutions that are sustainable by design. Our business 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 we
do. In 2018, Mondi had revenues of €7.48 billion and
underlying EBITDA of €1.76 billion.
Mondi has a premium listing on the London Stock Exchange (MNDI),
and a secondary listing on the JSE Limited (MNP). Mondi is a FTSE
100 constituent, and has been included in the FTSE4Good Index
Series since 2008 and the FTSE/JSE Responsible Investment Index
Series since 2007.
Sponsor in South Africa: UBS
South Africa Proprietary Limited.