LSE- and JSE-listed packaging and paper group Mondi reported underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) of €7.4-billion for the year ended December 31, 2018.
That was 19% higher than the Ebitda reported for 2017 and translated to an underlying operating profit of €1.3-billion, which was up 38% compared with 2017, and basic underlying earnings of 189c, which was up 27% compared with 2017.
The company declared a full year ordinary dividend of 76c apiece, which was up 23% compared with 2017.
Mondi group CEO Peter Oswald said in a statement that the company had benefitted from good demand across its fibre packaging businesses, higher average selling prices and the contribution from its acquisitions, which totalled €424-million.
The company in 2018 acquired Powerflute, in Finland, which is an integrated pulp and paper mill with a production capacity of 285 000 t/y of high-performance semi-chemical fluting, for €365-million.
Additionally, Mondi acquired two industrial bag plants in Egypt, while selling a flat sack kraft paper mill in Pine Bluff, in Arkansas, in the US, which had a 130 000 t/y production capacity.
Mondi saw volume growth in fibre packaging, driven by the benefit of previously completed capital investment projects, operational improvements and strong organic volume growth in industrial bags.
Consumer Packaging volumes were impacted on by the company’s targeted approach to exit lower-margin business and a decline in volumes in personal care components.
While core product volumes in the uncoated fine paper business were up year-on-year, market pulp and newsprint volumes were negatively impacted, respectively, by the extended shut at the Richards Bay mill, in South Africa, and the strategic decision taken in the prior year to exit the newsprint market in South Africa.
“We continue to make good progress in delivering value accretive growth and enhancing the ongoing cost competitiveness of our operations through our capital expenditure programme. During the fourth quarter of 2018, we successfully started up the €335-million modernisation of our kraft paper facility in Steti and we received the final permits to proceed with our investment in a 300 000 t kraft top white machine at our Ruzomberok mill, in Slovakia, while work to upgrade the pulp mill at the same site is progressing well,” Oswald noted.
Expansionary capital expenditure projects at a number of Mondi’s packaging operations, and the integration of acquisitions completed in the year, will further enhance its production capabilities and product offering to customers.
Looking ahead, while there are macroeconomic uncertainties in some of the countries in which Mondi operates, the company remains confident in the structural growth drivers in the packaging sectors in which it operates.
Pricing was mixed going into 2019, with recent price reductions in containerboard grades and market pulp and stronger pricing in the company’s kraft paper markets.
During 2019, Mondi plans on doing longer maintenance and project related shuts, while looking forward to the incremental contribution from recently completed major capital projects and acquisitions.
Maintenance shuts are planned at Mondi’s Syltyvkar, Powerfulte and Richards Bay mills for the first half of 2019, while the majority of remaining shuts are scheduled for the second half of the year.