Mondi’s (MNDI) underlying cash profits fell 6 per cent to €1.66bn* (£1.41bn) from last year, with the paper and packaging specialist bearing the impact of lower average containerboard selling prices and €150m in planned maintenance shutdowns, which incoming chief executive Andrew King admitted was “exceptionally high”. The group plans a similar maintenance programme this year, although it expects this cost to come down to €100m in 2020.
Mondi lay in thrall to a weak pricing environment for much of 2019, with average benchmark European prices for unbleached kraftliner down 11 per cent year on year while recycled containerboard prices fell by around 18 per cent. Things appear to be looking up, however. A slowdown in customer destocking and more orders have prompted negotiations with customers about price rises for unbleached kraftliner and containerboard.
Mondi’s capital investment programme continued as the group bids to “debottleneck” production and avoid unplanned shuts at its Syktyvkar mill in Russia. Through converting a containerboard machine at its Steti plant in the Czech Republic, it is also cutting back on containerboard capacity by around 30,000 tonnes per year in favour of expanding its kraftliner capacity by 75,000 tonnes. Mondi expects to commit €700m-€800m in capital expenditure this year, followed by €450m-€550m in 2021. Over the past three years, Mondi’s largest capital projects have together contributed around €75m of annual incremental operating profit.
Jefferies forecasts full-year 2020 cash profits of €1.48bn, down from €1.66bn in 2019.
| MONDI (MNDI) | ||||
| ORD PRICE: | 1,608p | MARKET VALUE: | £9.21bn | |
| TOUCH: | 1,607-1,609p | 12-MONTH HIGH: | 1,883p | LOW: 1,484p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 827¢* | NET DEBT: | 50%** | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2015 | 6.82 | 0.80 | 124 | 52 |
| 2016 | 6.66 | 0.84 | 132 | 57 |
| 2017 | 7.10 | 0.88 | 138 | 62 |
| 2018 | 7.48 | 1.11 | 170 | 76 |
| 2019 | 7.27 | 1.10 | 168 | 83 |
| % change | -3 | -1 | -1 | +9 |
| Ex-div: | 02 Apr | |||
| Payment: | 14 May | |||
| *£1=€1.18 Includes intangible assets of €1bn, or 212¢ a share **Includes lease liabilities of €218m | ||||
