MNDI Mondi Plc

 
TIDMMNDI 
 
Mondi plc 
 
(Incorporated in England and Wales) 
 
(Registered number: 6209386) 
 
LEI: 213800LOZA69QFDC9N34 
 
LSE share code: MNDI                       ISIN: GB00B1CRLC47 
 
JSE share code: MNP 
 
14 October 2022 
 
Trading update: Strong Q3 performance 
 
Underlying EBITDA from continuing operations (Group excluding the Russian 
operations) for the third quarter was ?450 million, up 55% compared to the 
prior year period (Q3 2021: ?290 million). Higher average selling prices and 
overall volume growth more than offset significant cost pressures. 
 
Andrew King, Chief Executive Officer, said: "Mondi delivered strongly in the 
third quarter. My sincere thanks go to all of my colleagues for their ongoing 
agility and commitment in challenging times. We continue to partner with our 
customers, helping to lead the way towards a circular economy with our unique 
portfolio of innovative and sustainable packaging and paper solutions. We also 
remain focused on operational efficiency and cost control. 
 
Our ambitious expansionary capital investment programme is progressing well, as 
we continue to invest in our cost advantaged asset base to capture 
opportunities in our structurally growing packaging markets, enhance our 
competitiveness and deliver sustainably into the future." 
 
Business unit overview 
 
Corrugated Packaging benefitted from higher average selling prices compared to 
the prior year period, leveraging our innovative product portfolio and strong 
customer proposition. Corrugated Solutions box volumes were lower in the 
quarter driven by generally softer demand when compared with the strong volume 
growth delivered in the prior year. 
 
Flexible Packaging performed well, with resilient demand during the period. 
Price increases across our range of kraft papers and packaging products were 
implemented during the quarter, where not fixed by annual or semi-annual 
contracts. 
 
Uncoated Fine Paper achieved higher average selling prices and grew pulp 
volumes in the quarter while uncoated fine paper volumes were lower. The 
non-cash forestry fair value gain was higher. 
 
Input costs 
 
Input costs were significantly higher in the quarter, both year-on-year and 
sequentially, largely due to higher wood and energy costs. Increased demand and 
tight market conditions for wood continue to impact availability and pricing. 
We were able to mitigate the impact of significantly higher European gas and 
electricity costs as most of our pulp and paper mills generate the majority of 
their energy needs internally, with around 80% of the fuels used in this 
process from biomass sources, and only around 10% of our fuel sourced from 
natural gas. We look to mitigate the effect of inflationary pressures on the 
cost base through our cost control initiatives. 
 
Investing for growth 
 
Our ?1 billion expansionary capital investment programme is progressing well, 
and we expect these projects to deliver mid-teen returns when in full 
operation. 
 
As part of this programme, we are pleased to have recently approved the 
investment in a new 210,000 tonne per annum kraft paper machine at our flagship 
Steti mill (Czech Republic) for ?400 million. This cost advantaged machine will 
meet the growing demand for sustainable paper-based flexible packaging to 
better serve our customers. Start-up is expected in 2025 with full production 
ramp up by 2027. 
 
Adding to our pipeline of growth projects, in August 2022 we agreed to acquire 
the Duino mill near Trieste (Italy). We plan to convert the existing 
lightweight coated mechanical paper machine into a high-quality, 
cost-competitive recycled containerboard machine with an annual capacity of 
around 420,000 tonnes. The total acquisition and capital investment cost is 
estimated at around ?240 million. The mill is ideally located to source paper 
for recycling, supply the Group's Corrugated Solutions plants in Central 
Europe and Turkey as well as to serve the growing local Italian market. This 
project provides an opportunity to grow our packaging business, build on our 
integrated platform and broaden our geographic reach. The acquisition is 
subject to competition clearance and other closing conditions with completion 
expected in the fourth quarter of 2022. The converted machine is expected to 
start-up in 2025 and deliver mid-teen returns when in full operation. 
 
We continue to actively consider further investment opportunities to serve our 
customers' growing demand for sustainable packaging solutions, improve our 
environmental footprint and further improve our cost competitiveness. 
 
Russian operations 
 
Trading update 
 
The Group's Russian operations have been classified as held for sale and 
presented as discontinued operations. In the third quarter of 2022, the Russian 
operations generated profit after tax of ?104 million (EBITDA of ?129 million). 
 
Update on proposed disposal of Mondi Syktyvkar 
 
On 12 August 2022 we announced that the Group had entered into an agreement to 
sell its most significant facility in Russia, Joint Stock Company Mondi 
Syktyvkar, together with two affiliated entities (together "Syktyvkar") to 
Augment Investments Limited for a consideration of RUB 95 billion (around ?1.5 
billion at current exchange rate), payable in cash on completion (the 
"Disposal"). 
 
The Disposal is conditional on the approval of the Russian Federation's 
Government Sub-Commission for the Control of Foreign Investments and customary 
antitrust approvals. Furthermore, the planned remittance of the excluded cash 
balance of RUB 16 billion by form of dividend to Mondi before completion 
requires the approval of the Ministry of Finance of the Russian Federation. 
 
These approvals remain outstanding. 
 
Summary and outlook 
 
While significant geopolitical and macroeconomic uncertainties remain and we 
anticipate continued inflationary pressures on our cost base as we enter the 
fourth quarter, we are confident that the Group will continue to demonstrate 
its resilience and deliver a year of good progress. 
 
The Group remains well-placed to deliver sustainably into the future, 
underpinned by our integrated cost advantaged asset base, culture of continuous 
improvement, portfolio of sustainable packaging solutions and the strategic 
flexibility offered by our unique platform for growth, strong cash generation 
and financial position. 
 
Contact details 
 
Investors/analysts 
Mike Powell                                      +44 193 282 6322 
Mondi Group Chief Financial Officer 
 
Media 
Chris Gurney                                     +44 193 282 6358 
Mondi Group Senior Communications Manager 
 
Richard Mountain                                 +44 790 968 4466 
FTI Consulting 
 
Conference call dial-in details 
 
A conference call will be held today at 08:00 (BST) / 09:00 (CEST/SAST). 
 
To access the facility please register your name and contact details: https:// 
register.vevent.com/register/BI356338855df84991843961483b13bc38 
 
Replay details 
 
Following the call a replay will be made available until 21 October 2022: 
 
https://edge.media-server.com/mmc/p/r4iybh8a 
 
Notes 
 
This trading update provides an overview of our financial performance since the 
half-year ended 30 June 2022. Financial metrics have not been audited or 
reviewed by Mondi's external auditors. 
 
Underlying EBITDA is an Alternative Performance Measure that is not defined or 
specified according to International Financial Reporting Standards. This 
measure is defined as operating profit before special items, depreciation, 
amortisation and impairments not recorded as special items. 
 
About Mondi 
 
Mondi is a global leader in packaging and paper, contributing to a better world 
by making innovative solutions that are sustainable by design. Our business is 
integrated across the value chain - from managing forests and producing pulp, 
paper and films, to developing and manufacturing sustainable consumer and 
industrial packaging solutions using paper where possible, plastic when useful. 
Sustainability is at the centre of our strategy, with our ambitious commitments 
to 2030 focused on circular driven solutions, created by empowered people, 
taking action on climate. 
 
In 2021, Mondi had revenues of ?7.0 billion and underlying EBITDA of ?1.2 
billion from continuing operations, and employed 21,000 people worldwide. Mondi 
has a premium listing on the London Stock Exchange (MNDI), where the Group is a 
FTSE100 constituent, and also has a secondary listing on the JSE Limited (MNP). 
 
mondigroup.com 
 
Sponsor in South Africa: Merrill Lynch South Africa Proprietary Limited t/a 
BofA Securities. 
 
 
 
END 
 
 

(END) Dow Jones Newswires

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