Leer en español
Читать на русском
For the third quarter, the group’s underlying EBITDA from current operations (excluding Russian operations) increased by 55% compared to Q3 2021 to EUR 450 million. For about the same amount, management approved an investment in a new kraft paper machine with a capacity of 210,000 tons per annum at the company’s flagship Štětí mill (Czech Republic)
“Mondi delivered strongly in the third quarter,” says Andrew King, the group’s CEO. “My sincere thanks go to all of my colleagues for their ongoing agility and commitment in challenging times.
“We 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 the company’s 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 the Mondi‘s 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
According to the company, 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.
The group was able to mitigate the impact of significantly higher European gas and electricity costs as most of the Mondi‘s 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 their fuel sourced from natural gas.
The company looks to mitigate the effect of inflationary pressures on the cost base through the cost control initiatives.
Investing for growth
The group’s €1 billion expansionary capital investment programme is progressing, these projects are expected to deliver mid-teen returns when in full operation.
As part of this programme, Mondi Group have recently approved the investment in a new 210,000 tonne per annum kraft paper machine at the company’s flagship Štětí mill (Czech Republic) for €400 million.
This cost advantaged machine should meet the growing demand for sustainable paper-based flexible packaging. Start-up is expected in 2025 with full production ramp up by 2027.
Adding to the company’s pipeline of growth projects, in August 2022 Mondi agreed to acquire the Duino mill near Trieste (Italy). The group plans 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 (up 31% to 3.2 million tonnes of annual containerboard production in 2019-2021).
The converted machine is expected to start-up in 2025 and deliver mid-teen returns when in full operation. Mondi Group continues to actively consider further investment opportunities.
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 Mondi announced that the group had entered into an agreement to sell its most significant facility in Russia, JSC Mondi Syktyvkar, together with two affiliated entities, to Russian-owned Augment Investments Limited for a consideration of RUB 95 billion (around €1.5 billion at current exchange rate), payable in cash on completion.
Summary and outlook
While significant geopolitical and macroeconomic uncertainties remain and the group anticipates continued inflationary pressures on its cost base as it enters the fourth quarter, Mondi intends to continue to demonstrate its resilience and deliver a year of good progress.
According to the group, it remains well-placed to deliver sustainably into the future, underpinned by its integrated cost advantaged asset base, culture of continuous improvement, portfolio of sustainable packaging solutions and the strategic flexibility offered by the company’s platform for growth, strong cash generation and financial position.
gofro.expert
