Mondi reports strong performance in first quarter

Mondi recently released its trading update, which provides an overview of its 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.

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 per cent above the comparable prior year period (€405 million), and six per cent 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 per cent 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 its 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, it estimates that the impact of maintenance shuts on underlying EBITDA for 2019 will be around €150 million (2018: €110 million), in line with its 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, the company saw further improvement in the sub-segment of consumer goods packaging as it benefits from a restructured plant network and continuous improvement initiatives. As anticipated, it has also seen a stabilising of performance in personal care components, which has been under pressure from declining volumes. It continues to work actively with its 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 the company’s 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.


Mondi has positioned the Group to benefit from the key industry trends of sustainability, e-commerce and enhancing its customers’ brand value. While macro-economic uncertainties remain, its focus on delivering value accretive growth and its performance-driven culture means it is confident of continuing to deliver a strong and industry leading performance.