Mondi plc
(Incorporated in England and
Wales)
(Registered number: 6209386)
LEI: 213800LOZA69QFDC9N34
LSE share code: MNDI
ISIN: GB00B1CRLC47
JSE share code: MNP
This announcement contains inside information.
4 May 2022
Update on trading and Russian
businesses
Mondi today provides an update on trading for the three months
to 31 March 2022 and its Russian
businesses.
Strong delivery in Q1 2022
Mondi delivered strongly in the first quarter of 2022. Demand
was good across the business, supported by our broad range of
innovative, sustainable packaging and paper solutions, product
quality and customer service. Higher average selling prices more
than offset continued cost pressures.
Underlying EBITDA for the first quarter was €574 million,
up 63% compared to the prior year period (Q1 2021:
€353 million) and up 41% on a sequential basis (Q4 2021: €406
million). In the current context, the Group believes it is
appropriate to report that excluding the Russian operations,
underlying EBITDA for the first quarter was approximately €460
million, up around 70% compared to the prior year period.
This performance is testament to the continued dedication of our
people, our strong customer relationships and the strength of our
integrated business model.
We made progress on our expansionary capital investment
programme to capture growth across our packaging businesses in
structurally growing markets underpinned by demand for eCommerce
and sustainable packaging solutions. As previously outlined, our
pipeline currently includes around €1 billion of expansionary
projects already approved or under advanced evaluation, which we
anticipate will generate mid-teen returns when in full operation.
We continue to actively consider further capital investment
opportunities.
The sale of the Personal Care Components business, which will
simplify our portfolio and deliver greater focus, remains on track
for completion in the second half of the year.
At the end of March 2022, Group
net debt to underlying EBITDA was approximately 1.0x.
Update on Russian businesses
Mondi remains profoundly concerned about the war in Ukraine and is shocked by the humanitarian
impact. We express our deepest sympathy to all those affected by
the ongoing hostilities, reiterating our call for an urgent
cessation and a peaceful resolution.
Since the announcement on 10 March, having assessed all options
for the Group’s interests in Russia and recognising its corporate values
and stakeholder responsibilities, the Board has decided to divest
the Group’s Russian assets. The divestment process for these
significant assets is operationally and structurally complex and is
being undertaken in an evolving political and regulatory
environment. Accordingly, there can be no certainty when a
transaction will be completed or as to the structure of any
possible transaction. As of 31 December
2021, the net asset value of the Russian operations was €687
million.
The Russian businesses have, to date, managed supply chain
constraints. However, the situation remains fluid, with
interruptions to pulp and paper production possible going forward.
All significant capital expenditure projects in Russia have been suspended.
Business unit trading overview
Growth in demand for Corrugated Packaging normalised
during the quarter from the high levels seen last year. We are
implementing further price increases across our portfolio of
containerboard grades. Corrugated Solutions continues to pass on
higher input paper costs.
Flexible Packaging performed well in the period, driven
by strong demand for sustainable packaging solutions and the
positive effect of higher kraft paper and paper bag prices. On the
back of continued tight markets, we are in discussion with
customers about further price increases across the business.
Engineered Materials’ performance in the quarter was
stable, with a good contribution from Functional Paper and
Films.
Uncoated Fine Paper markets remain tight in Europe due to good demand and limited supply.
Average uncoated fine paper prices were higher as a result of price
increases implemented during 2021 and 2022. The Richards Bay mill
(South Africa) is performing well
following the recent upgrade of the energy and chemical plants.
Merebank’s (South Africa) uncoated
fine paper operations are currently suspended due to severe floods
around the city of Durban in
mid-April. The impact on the Group’s performance is not expected to
be material.
Input costs, currency movements and
maintenance shuts
Input costs were significantly higher in the quarter, both
year-on-year and sequentially, with higher energy, resins,
transport, wood and chemical costs. Currency movements had a net
adverse impact on underlying EBITDA against the comparable prior
year period driven by a weaker Russian rouble and Turkish lira.
The impact of scheduled maintenance shuts on underlying EBITDA
during the period was around €20 million, with a similar
amount expected in the second quarter. Our full year estimate is
unchanged at around €110 million.
Summary and outlook
Mondi delivered strongly in the first quarter of 2022. While we
expect to realise the full benefit of the price increases
implemented in 2021 and 2022 as we go through the second quarter,
we also anticipate continued inflationary pressures on our cost
base. The full year will benefit from shorter planned maintenance
shuts compared to 2021 and the contribution from our capital
investment programme.
While it is early in the year and significant geopolitical and
macroeconomic uncertainties remain, the Group expects to deliver a
year of good progress. Mondi remains well placed to deliver
sustainably into the future.
Contact details
Investors/analysts
Clara Valera
Mondi Group Head of Strategy and Investor Relations |
+44 193 282 6357 |
Media
Kerry Cooper
Mondi Group Head of External Communication |
+44 193 282 6323 |
Richard
Mountain
FTI Consulting |
+44 790 968 4466 |
Conference call dial-in details
A conference call will be held tomorrow 5 May at 08:00 (BST) /
09:00 (SAST).
The conference call dial-in numbers are:
UK
+44 1 212818004
South
Africa
+27 110197047 (to join the call press *0)
Other
+39 02 802 09 11
Note: No passcode is required to join the conference call.
Should you have any issues accessing the facility please call +39
02 802 09 11.
A replay of the call will be available until 19 May 2022.
Dial-in: +39 02 802 09 87
Passcode: 700715#
Pin: 715#
Notes
This trading update provides an overview of our financial
performance and financial position for the three months to
31 March 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 packaging and paper 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 effective industrial and
consumer packaging solutions. Sustainability is at the centre of
our strategy and intrinsic in the way we do business. We lead the
industry with our customer-centric approach, EcoSolutions, where we
ask the right questions to find the most sustainable solution. In
2021, Mondi had revenues of €7.7 billion and underlying EBITDA of
€1.5 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:
Merrill Lynch South Africa Proprietary Limited t/a BofA
Securities.