MONDI PLC - Trading update: Mondi delivers resilient Q3 performance

Trading update: Mondi delivers resilient Q3 performance

Mondi plc
(Incorporated in England and Wales)
(Registered number: 6209386)
LEI: 213800LOZA69QFDC9N34

LSE share code: MNDI                  ISIN: GB00B1CRLC47
JSE share code: MNP

15 October 2020

Trading update: Mondi delivers resilient Q3 performance

Underlying EBITDA for the third quarter of 2020 was 306 million, down 20% on the comparable prior year
period (Q3 2019: 383 million), as lower average selling prices and negative currency effects more than
offset lower costs. Compared to the second quarter of 2020 (sequentially), underlying EBITDA was down
13% (Q2 2020: 353 million). Good volume growth in uncoated fine paper and fibre-based packaging
products and ongoing strong cost control were more than offset by the impact of planned maintenance shuts,
negative currency effects and lower average selling prices.

Andrew King, Group CEO, commented The decisive action we took in the early stages of the COVID-19
pandemic helped to protect our people, maintain supply of essential products and services, and deliver a
resilient performance. Our people have demonstrated their enterprise and commitment, taking care of
colleagues, communities and customers in these unprecedented times.

I am pleased that sustainable packaging continues to be a focus for our customers. We continue to make
good progress leveraging our award-winning innovation capabilities and customer-centric approach to
optimise packaging design using paper where possible, plastic when useful.

In Corrugated Packaging, demand from e-commerce and consumer applications remained strong. We
also saw some recovery in industrial end-uses from the lows of the second quarter. We achieved good
volume growth in Corrugated Solutions measured both year-on-year and sequentially. Given the strong
order position and normalised inventory levels, we are currently in discussions with customers around price
increases for various containerboard grades.

Flexible Packaging demand remained resilient during the period and volumes in our paper bags business
grew year-on-year. Following a strong performance in the first half, we saw some supply chain de-stocking
effects impacting volumes in our consumer flexibles business during the quarter.

We continue to leverage Engineered Materials coating technologies to develop sustainable packaging
solutions. As expected, we saw lower personal care component volumes as a key product matures. Demand
in industrial and specialised end-uses continued to be impacted by lockdown restrictions, in particular in
release liner. We are implementing a range of measures to reduce the cost base, including the closure of a
release liner plant in Pleasant Prairie (Wisconsin, US) and engaging with employee representatives on the
restructuring of our personal care components focused operations in Gronau (Germany).

Encouragingly, Uncoated Fine Paper demand improved as lockdown restrictions in Europe, Russia and
Southern Africa eased with a gradual pick-up in activity in schools, offices and commercial printing. Sales
volumes were significantly up sequentially, although they are still down on the comparable prior year
period. Average uncoated fine paper prices were lower than in the first half of the year. Our South African
operations are currently affected by an industry-wide strike. We are engaging with trade unions and
employee representatives to reach an agreement while we continue to deliver products to our customers.
The Uncoated Fine Paper business remains well-positioned in the context of the current market
challenges given our cost competitiveness, product diversification and geographic positioning.
Average input costs were stable sequentially and cost control was strong across the business. Currency
movements had a net negative impact on underlying EBITDA compared to the second quarter, driven by a
weaker US dollar, impacting a number of the Group's globally traded products, coupled with a weaker
Russian rouble and Turkish lira. Given prevailing exchange rates, we anticipate a further net negative
currency impact in the fourth quarter.

To protect our employees and suppliers and minimise execution risk, we decided to postpone most planned
maintenance shuts to the second half of the year. During the quarter, planned maintenance shuts with an
estimated impact on underlying EBITDA of around 35 million (2019: 40 million) were carried out
successfully. Based on prevailing market prices, we continue to estimate that the impact of planned mill
maintenance shuts on underlying EBITDA for 2020 will be around 100 million (2019: 150 million), with the
fourth quarter impact expected to be around 55 million (2019: 30 million).

Our major capital investment projects are progressing according to plan. The 67 million capital investment
project to convert a containerboard machine at Steti (Czech Republic) to become fully dedicated to the
production of speciality kraft paper for shopping bag applications is scheduled to be commissioned during
the fourth quarter. This additional capacity (75,000 tonnes) further supports our retail customers in their
efforts to replace unnecessary plastic as they transition to more sustainable packaging solutions that
contribute to the circular economy.

During the period, we paid an interim dividend to shareholders amounting to 237 million. We also redeemed
our 3.375% 500 million Eurobond from available cash. There are no other material short-term debt
maturities. The Groups financial position remains strong, with liquidity of around 970 million.


The macro-economic outlook continues to be uncertain, however we are confident that the Group will
continue to demonstrate its resilience, while remaining well-positioned for when the recovery takes place.
Our confidence is underpinned by Mondis integrated high-quality, 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.

Contact details

Clara Valera                                                  +44 193 282 6357
Mondi Group Head of Strategy and Investor Relations

Kerry Cooper                                                  +44 193 282 6323
Mondi Group Head of External Communication

Richard Mountain                                              +44 790 968 4466
FTI Consulting

Conference call dial-in details

A conference call will be held today at 08:00 (UK) / 09:00 (South Africa).

The conference call dial-in numbers are:
UK                 0800 279 6619
South Africa       0800 014 552
Other              +44 2071 928 338
Conference ID      6763227

Should you have any issues with accessing the dial-in conference call, please call +44 2071 928338.

A replay facility will be available until 22 October 2020 (Pin number: 6763227). The dial in details are:

United Kingdom     0844 571 8951
Other              +44 3333 009785

This trading update provides an overview of our financial performance and financial position since the half
year ended 30 June 2020. Financial metrics have not been audited or reviewed by Mondis 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 fully integrated across the
value chain  from managing forests and producing pulp, paper and plastic 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 2019, Mondi had
revenues of 7.27 billion and underlying EBITDA of 1.66 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: UBS South Africa Proprietary Limited.

Date: 15-10-2020 08:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.
Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 1501 votes
It depends on how the funds are used.
73% - 9705 votes
No. We should have gotten the loan elsewhere.
16% - 2155 votes