Mondi trading remains positive in first half
By Josh White
Date: Thursday 05 Aug 2021
(Sharecast News) - Paper and packaging company Mondi reported higher sales volumes and higher average selling prices in its first half on Thursday, with underlying EBITDA of €709m (£604.38m), down from €738m year-on-year, and a margin of 19.5%.
The FTSE 100 firm said it generated cash of €552m from its operations in the six months ended 30 June, down from €602m, as its balance sheet leverage stood at 1.5x net debt-to-underlying EBITDA.
It completed the acquisition of Olmuksan during the period, strengthening its position in the growing Turkish corrugated market.
Mondi said it also made "good progress" on its capital investment projects, delivering growth, sustainability benefits and enhanced cost competitiveness.
The company approved a €125m upgrade and expansion of the Kuopio containerboard mill in Finland, and made further investment in corrugated plants to support strong growth in e-commerce.
On the financial front, Mondi signed a €750m revolving credit facility, aligning its financing with its new sustainability focus and extending its debt maturity profile.
The board declared an interim dividend of 20.0 euro cents per share, adding that the firm was "well-positioned" for growth in packaging markets, with a cost-advantaged asset base, strong financial position and a "unique portfolio" of sustainable solutions.
"Volume growth and pricing momentum in our packaging markets has been strong," said group chief executive officer Andrew King.
"Encouragingly, we have also seen improving uncoated fine paper markets. We exhibited strong cost control, against a backdrop of rising commodity input costs, whilst keeping a sharp focus on delivering our high-quality product and service offering to our customers.
"We successfully started up a new 300,000 tonne containerboard line at Ruzomberok in Slovakia, and a repurposed machine in Steti in the Czech Republic, which is now dedicated to producing speciality kraft paper for e-commerce and retail shopping bags."
King said expansionary projects were also underway at a number of Mondi's converting packaging operations, enhancing its production capabilities and product offering to further support customers, particularly in e-commerce.
"We also approved an expansion and upgrade of our semi-chemical fluting mill in Kuopio in Finland.
"We are excited by the possibilities offered by our cost-advantaged asset base and we continue to evaluate further development opportunities in our structurally growing packaging markets.
"We completed the acquisition of Olmuksan, expanding our corrugated offering in the fast growing Turkish market, and welcome the team to the Mondi family."
Andrew King said that, while macroeconomic uncertainties remain, trading was positive.
"In the second half, we expect to see the full impact of the price increases implemented to date and the continued contribution from our capital investment projects.
"We also expect the impact of planned maintenance shuts and ongoing input cost pressures, which we aim to mitigate by our relentless focus on cost control.
"Underpinned by the Group's integrated cost-advantaged asset base, culture of continuous improvement, portfolio of sustainable packaging solutions and the strategic flexibility offered by our strong cash generation and financial position, the group remains well-placed to deliver sustainably into the future."
At 0859 BST, shares in Mondi were up 2.85% at 2,059p.
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