A “mixed” pricing environment, macroeconomic uncertainty and higher maintenance costs set a cautious 12-month outlook for Mondi (MNDI). Chief executive Peter Oswald detects a “nervousness” in the markets over containerboard prices, which were driven downwards after their November peak by a fall in demand in the fourth quarter, and exacerbated by customer de-stocking and pressure from imports into Europe. Fortunately for the packaging specialist, Mondi is exposed to niche markets, such as white top kraftliner and semi-chemical fluting, where prices are less volatile and currently around 2018 levels, Mr Oswald contended. Elsewhere, price increases were partly achieved in Mondi’s industrial bags division, in order to compensate for higher paper input costs, but following mid-year increases, contractual agreements limited the passing on of further cost inflation, squeezing margins as a result.
Maintenance costs are expected to rise €40m (£34.3m) year-on-year to €150m as a result of maintenance shuts at a number of plants. Mr Oswald described the shutdowns as normal and an operational “necessity”. But “given that we have very high margins, every day of shut has a big impact on profitability,” Mr Oswald admitted.
Broker Jefferies forecasts full-year 2019 EPS of 182¢, down from 189¢ over the prior year.
MONDI (MNDI) | ||||
ORD PRICE: | 1,763p | MARKET VALUE: | £8.61bn† | |
TOUCH: | 1,762-1,763p | 12-MONTH HIGH: | 2,250p | LOW: 1,558p |
DIVIDEND YIELD: | 3.7% | PE RATIO: | 12 | |
NET ASSET VALUE: | 718¢* | NET DEBT: | 52% |
Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€bn) | Earnings per share (¢) | Dividend per share (¢) |
2014 | 6.40 | 0.62 | 97.4 | 42 |
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 |
% change | +5 | +25 | +23 | +23 |
Ex-div: | 11 Apr | |||
Payment: | 16 May | |||
£1=€1.7 *Includes intangible assets of €1bn, or 213¢ a share **Restated for IFRS 15, does not include 2017 special dividend of 100¢ (same dates apply) †Includes Johannesburg-listed shares |