In a trading update for the three months to March 31, JSE-listed packaging and paper company Mondi reports earnings before interest, taxes, depreciation and amortisation (Ebitda) of €212-million, down from Ebitda of €214-million for the three months to end December 2025.

Market conditions in the first quarter of the year remained challenging. Significantly heightened geopolitical tensions in the Middle East further increased volatility in an already complex operating environment, the company points out.

“We have a limited direct exposure to the region and all operations continue to run safely, with the wellbeing of our colleagues remaining our highest priority,” the company says.

Mondi has experienced increased energy, raw material and logistics costs and is actively responding with pricing actions.

While there is a customary lag, the company expects the impact of these price increases to take full effect in the third quarter of this year, it reports.

The company's Corrugated Packaging and Flexible Packaging business units increased sales volumes across a range of paper grades, which was also supported by recent capacity expansions and exposure to diversified geographies, end markets and products.

There were also no planned maintenance shuts in the quarter, with the increase in volumes being offset by lower average selling prices and, towards the end of the quarter, higher energy-related input costs.

Further, in its converting operations, performance of its Corrugated Solutions and Paper Bags businesses was impacted by margin pressure, while Consumer Flexibles delivered a broadly stable performance, supported by resilient end-markets, Mondi says.

The company announced the closure of a further three converting plants in April, comprising a Consumer Flexibles plant in Hungary and Corrugated Solutions plants in Poland and Germany.

These closures will reduce its headcount by 450 over the course of this year. This brings the total number of recently announced plant closures to six, with customers transferring to alternative plants in its network.

Operational excellence initiatives, rigorous cost control and margin management remain central to strengthening its competitive advantage, says Mondi.

Further, cash flow optimisation remains a priority, supported by disciplined control of capital expenditure and rigorous working capital management.

The company's Ebitda for the quarter under review included an €8-million forestry fair value gain, up from the €1-million forestry fair value gain for the three months to end December 2025.

Following a recent reduction in wood prices in South Africa, and assuming the market environment does not change significantly for the remainder of the year, the full-year forestry fair value gain for this year is expected to be nil, Mondi adds.

“Against a backdrop of challenging market conditions, sales volumes increased, although lower selling prices and, latterly, cost pressures linked to escalating geopolitical tensions weighed on underlying Ebitda,” says Mondi Group CEO Andrew King.

“These pressures persist into the second quarter and we are taking pricing actions to mitigate their impact. While there is an inherent time lag, we expect these measures to take full effect in the third quarter.

“Despite the uncertain outlook, we continue to focus on what we can control, namely driving operational excellence, rigorous cost and margin discipline, optimising our production footprint and focused cash flow management.

“We are confident that we can navigate the current headwinds and continue to deliver our high-quality range of sustainable packaging and paper products for our customers,” he says.