Paper and packaging group Mondi’s revenue for the year ended December 31, decreased by 3% year-on-year as a result of lower average selling prices and lower sales volumes; however, operating profit increased by 2% year-on-year to €1.2-billion.
The company also undertook longer planned maintenance shuts and restructuring initiatives in the year under review.
The impact of planned maintenance shuts on underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) was about €150-million. The group reported underlying Ebitda of €1.6-billion in 2019, compared with underlying Ebitda of €1.7-billion in 2018.
Mondi declared a total ordinary dividend of €0.83 apiece in 2019, compared with €0.76 apiece in 2018.
The group stated that a solid operational performance, strong cost control and a good contribution from acquisitions and capital investment projects had partially offset the effects of market pressures in a number of key pulp and paper grades.
“Our capital investment programme – to deliver value accretive growth and enhance the ongoing cost competitiveness of our operations – remains on track.
“Having commissioned the pulp mill rebuild at our Ružomberok mill, in Slovakia, in the second half of the year, we are making good progress on the related investment in a new 300 000 t kraft top white machine at the same site and previously announced major capital investment at our Syktyvkar mill, in Russia and the tí mill, in Czech Republic,” noted group CEO Andrew King.
Mondi had smaller expansionary projects under way at a number of its converting packaging operations, which would further enhance the company’s production capabilities and product offering.
The company also reported strong performances from its Flexible Packaging and Engineered Materials segments, which helped to mitigate the margin pressures seen in the Corrugated Packaging and Uncoated Fine Paper segments in the face of market-driven price decreases.
Input costs were generally higher year-on-year, although Mondi asserted that there was some cost relief in the second half of the year, measured both on a sequential and year-on-year basis.
“On average, wood costs were higher in local currency terms. We saw higher wood costs in Russia, South Africa and northern Europe, while costs in some countries in central and eastern Europe were lower, owing to favourable regional wood supply dynamics.
“Driven by Chinese import policies, average benchmark paper for recycling costs were down 21% on the prior year, with the rate of decline accelerating in the second half of the year,” Mondi stated.
The company added that chemical costs were higher on average compared with the prior year; however, Mondi did see these costs lowering over the course of the year, while energy costs were lower.
Cash fixed costs were higher on average as a result of inflationary cost pressures and mill maintenance shut effects, although Mondi reported a positive trend over the course of the year.
In the year under review, Mondi completed the simplification of its corporate structure to a single holding company under Mondi in July 2019, which simplified cash and dividend flows, increased transparency, removed the complexity associated with the previous structure and enhanced its strategic flexibility.
King said that with the company’s unique product portfolio and EcoSolutions approach, it remained well positioned to support its customers in meeting their sustainability goals with packaging that is sustainable by design – “paper where possible, plastic when useful”.
“Looking ahead, we remained confident in the structural growth drivers in the packaging sectors in which we operate. Heightened macroeconomic uncertainties were likely to continue to affect markets in the short term and, while we were seeing indications of stability in pricing in certain segments, we started this year with lower prices across our key paper grades.
“Input cost relief, our ongoing profit improvement programmes and customer-centric innovation initiatives, and the benefits from our capital expenditure pipeline would continue to support our performance.
“With our robust business model, centred around our high-quality, cost-advantaged asset base, our culture of continuously driving performance and the strategic flexibility our strong cash generation and financial position bring, we continued to look to the future with confidence,” he pointed out.