Mondi to reorganise into four business units

10th October 2019 By: Tasneem Bulbulia - Creamer Media Reporter

Packaging and paper group Mondi plans to reorganise the business across four units, namely Corrugated Packaging, Flexible Packaging, Engineered Materials and Uncoated Fine Paper.

It noted in a trading update published on Thursday that the reorganisation would further strengthen its value chain integration, enhance its offering in sustainable packaging solutions and improve the way it partners with its customers.

The Corrugated Packaging unit will comprise the containerboard and corrugated solutions operations, while the Flexible Packaging unit will comprise the kraft paper, paper bags and consumer flexible packaging operations.

The Engineered Materials unit will comprise the personal care components, extrusion solutions and release liner operations. The Uncoated Fine Paper unit remains unchanged.

Meanwhile, Mondi said demand for its products in the third quarter had remained generally softer across the markets in which it operates, while prices for key paper grades were below those of the first half of the year.

Consequently, underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) decreased by 18% year-on-year to €383-million, and by 9% quarter-on-quarter to €423-million.

The group indicated that lower average selling prices from the highs reached towards the end of 2018 and into early this year, coupled with the anticipated lower forestry fair value gain, more than offset the benefits of its ongoing profit improvement initiatives.

Like-for-like sales volumes were, on average, marginally lower than the comparable prior-year period as a result of lower industrial bags and uncoated fine paper volumes; this was partly offset by growth in corrugated packaging. On average, costs were higher than the comparable prior-year period, although lower than the previous quarter.

Planned mill maintenance shuts during the quarter had an estimated impact on underlying Ebitda of around €40-million. Based on prevailing market prices, Mondi estimates the impact of planned mill maintenance shuts on underlying Ebitda for the full year to be about €150-million, compared with 2018’s €110-million.

“We continue to make good progress on our previously announced major capital investment projects at our high-quality, cost-advantaged operations in central Europe,” the group noted.