Mondi generates robust cash, increases total dividend for 2020 by 5%

25th February 2021 By: Donna Slater - Creamer Media Contributing Editor and Photographer

Mondi generates robust cash, increases total dividend for 2020 by 5%

JSE- and LSE-listed packaging and paper group Mondi generated cash from operations of €1.48-million during the 2020 financial year ended December 31, 2020, which is down 9% on the year prior.

Group revenue was also down 8% year-on-year, to €6.66-million, while operating profit decreased by 29% year-on-year to €868-million.

Mondi reports that it finished the year with strong demand in the packaging businesses supported by the long-term growth drivers of sustainability and e-commerce.

The group’s underlying earnings before interest, taxes, depreciation and amortisation are €1.35-million, with a margin of 20.3% and return on capital employed of 15.2%, which Mondi says reflects the strength of its business model.

Given its strong financial position and confidence in the future of the business, the group’s board has recommended a final 2020 dividend of €0.41 a share. Together with the interim dividend, this amounts to a total dividend for the year of €0.60 apiece, which is up 5% year-on-year.

Mondi notes that sustainable packaging continues to be a long-term priority for its customers and wider society, and the group is “uniquely positioned” as a manufacturer of paper and flexible plastic packaging to help customers transition to more sustainable packaging, with its slogan of “paper where possible, plastic when useful”.

Further, the group is investing in a so called “through-the-cycle” manner with capital investment projects that are delivering growth, enhancing cost competitiveness and providing sustainability benefits. 

CEO Andrew King says he is “extremely proud” of how Mondi’s teams rose to the challenges of 2020. “My sincere thanks go to my colleagues for their endurance, enterprise and ongoing commitment.”

He says Mondi took decisive action in the early stages of the Covid-19 pandemic, moving quickly to safeguard the group’s employees, support its communities and customers, and protect the profitability, liquidity and cash flow of the business while seeking to ensure it remains well placed to deliver value-accretive growth into the future.

Looking forward, King says that, although the near-term macroeconomic outlook continues to be uncertain, Mondi remains confident in the structural growth drivers in the packaging sectors in which it operates and the strength of its paper position.

“We are seeing strong order books supporting price increases in most packaging and pulp grades, and are encouraged by the improving uncoated fine paper demand.”

Further, he says Mondi is planning longer project-related maintenance shuts and is experiencing input cost pressures and currency headwinds, although the benefits from the group’s capital expenditure programme will continue to support its performance.

SUSTAINABILITY DRIVE

The drive to replace plastic carrier bags with paper-based alternatives and consumer preferences for fibre based primary packaging is supporting good demand across Mondi’s range of speciality kraft papers.

In 2020, Mondi was recognised by nonprofit charity Carbon Disclosure Project as one of only ten companies worldwide with a Triple A score on their environmental performance related to climate, forests and water security.

Mondi recently announced its ten-year sustainability roadmap to 2030 – MAP2030 – which focuses on circular-driven packaging and paper solutions, empowering people to take action on climate change.

The group, towards the end of February, also announced a three-year strategic partnership to support the United Nations World Food Programme’s (WFP’s) efforts to save and change lives around the globe.

Through the collaboration, Mondi will make a $1-million in-kind and financial contribution to help the WFP improve how it delivers nutritious food over a complex humanitarian supply chain, with an aim to reduce food waste and mitigate the impact of packaging on the environment.

Further, Mondi states that it is committed to reducing its greenhouse-gas emissions in line with science-based targets, maintaining zero deforestation in its wood supply, continuing to source wood sustainably from healthy and resilient forests and safeguarding biodiversity and water resources.