Mondi PLC Update on trading and Russian businesses

 
TIDMMNDI 
 
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                                     [phone] 
Mondi Group Head of Strategy and Investor 
Relations 
 
Media 
Kerry Cooper                                     [phone] 
Mondi Group Head of External Communication 
 
Richard Mountain                                 [phone] 
FTI Consulting 
 
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                               [phone] 
 
South Africa                [phone] (to join the call press *0) 
 
Other                           [phone] 
 
Note: No passcode is required to join the conference call. Should you have any 
issues accessing the facility please call [phone]. 
 
A replay of the call will be available until 19 May 2022. 
 
Dial-in: [phone] 
 
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. 
 
 
 
END 
 
 

(END) Dow Jones Newswires

May 04, 2022 12:49 ET (16:49 GMT)