Mondi's share price plummets amid challenging market conditions

Mondi’s share price fell by a whopping 16.7% on Monday morning after reporting softer markets and extended maintenance shuts for its third quarter to September 30.

The JSE and London Stock Exchange-listed global sustainable packaging and paper group said in a trading statement that underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) came to €223 million, including €20m of forestry fair value gain.

This was lower than the second quarter EBITDA of €274m, which included a €16m forestry fair value gain. The first quarter EBITDA came to €290m.

The share price fell to a new 12-month low of R203.10 on the JSE on Monday morning, and the price had fallen more than 37% over a year.

"Trading conditions in the third quarter were challenging, with softer volumes and declining prices across most pulp and paper grades,” said the CEO Andrew King.

“Volumes were impacted by subdued demand and paper selling prices declined. To mitigate the impact of the softer markets, we proactively extended certain scheduled annual maintenance shuts,” Mondi’s directors said in a statement.

EBITDA was lower than the second quarter in both the Corrugated and Flexible Packaging businesses. This was due to lower sales volumes and the planned maintenance shuts in the upstream pulp and paper businesses.

In addition, selling prices declined, largely reversing the increases implemented in the first half of the 2025 financial year.

The packaging converting businesses delivered a stable performance compared to the second quarter. Uncoated Fine Paper performance was significantly impacted by lower sales volumes due to weak demand and “intense” competition, planned maintenance shuts, and declining selling prices for uncoated fine paper and pulp.

"Across the group, we remain relentlessly focused on managing the controllables. We have sharpened our emphasis on margin management, rigorous cost optimisation, and continuous improvement. These initiatives enable us to navigate the headwinds, build a stronger, more efficient operating platform, and drive free cash flow,” said King.

The directors said challenging trading conditions were expected to persist for the remainder of this year as demand-side confidence remains fragile, key markets remain in oversupply, and current selling prices are lower than third quarter average selling prices.

They said that while they remain confident in the structural drivers underpinning through-cycle growth in their packaging solutions, they were equally cognisant of the impact of the prolonged cyclical downturn on near-term performance.

The integration of the recently acquired Schumacher was progressing well. “In the six months since completion, we have focused on integrating the business while driving the commercial strategy and have identified an additional €10m cost synergies, taking the total to €32m, to be realised over the three years from completion."

From October 1, the group was organised into two business units: Corrugated Packaging and Flexible Packaging. Uncoated Fine Paper was combined with Corrugated Packaging to form an enlarged Corrugated Packaging Business Unit. Flexible Packaging remains unchanged.

King said these changes would result in faster decision-making, cost take-out, and delivery of operational synergies across pulp and paper mills while retaining our customer-focused value chain orientation.

After a period of investment, Mondi was reaching the end of its current investment cycle with all major capacity expansion projects built on time, on budget, and operational.

“Our focus is now on achieving full productivity ramp-up, executing our commercial strategy, driving cash generation, and delivering returns.”

Profitability from these projects was heavily influenced by market conditions, and it was now expected that the net incremental contribution to EBITDA in the 2025 financial year would be around €30m.

“We remain confident that our expansionary projects are cost competitive, deliver significant integration benefits, and, once fully optimised, will deliver mid-teen returns on a through-cycle basis,” the directors said.

Good progress had been made with the feasibility study to build a new sack kraft paper machine at the pulp mill in Hinton, Canada. However, due to the market environment, the investment was delayed, the directors said.

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