Listed global producer of sustainable packaging and paper Mondi, which earlier this year was close to buying UK giant DS Smith, has taken a hit from lower selling prices in the first quarter of the year.
The company reported on Friday morning that its underlying EBITDA for the first quarter of 2024 was €214m (£183m) (Q4 2023: €260m). The group stated this result was in line with its expectations as it included “a one-off” €32m (£27m) loss incurred from the devaluation of the Egyptian pound.
The group stated that average selling prices were lower compared to Q4 2023, however recently it announced paper price increases, which the group said are starting to come through in the second quarter.
As well as that, Mondi’s board stated that market conditions continued to improve with stronger order books leading to higher sales volumes across our range of paper grades compared to Q4 of 2023.
Mondi looked about to add DS Smith in a City mega-merger but was pipped to the takeover by American rival International Paper.
In corrugated packaging, containerboard sales volumes were higher compared to Q4 2023 and corrugated solutions delivered a stable performance. Flexible packaging saw good sales volume growth which was largely offset by lower average selling prices.
While uncoated fine paper benefited from price increases implemented in the quarter, however, a lower forestry fair value gain impacted comparative performance.
During the first quarter of the current financial year, Mondi paid a €1.60 per share special dividend to shareholders, returning the net proceeds received from the sale of all the group’s Russian assets.
The paper and packaging giant agreed to sell its largest Russian plant for around €775m (£668 million) last September to a Moscow-based property development group.
The special dividend was accompanied by a share consolidation whereby shareholders received 10 new ordinary shares for every 11 existing ordinary shares held.
Commenting on the update, CEO Andrew King said: “Market demand has continued to improve in the first quarter of the year, with stronger order books leading to higher sales volumes across our range of paper grades.”
He did point out that “while we entered the year with lower selling prices compared to the prior year, improvements in demand have supported our initiatives to increase selling prices across the business.”
“We remain well positioned to benefit from this growing demand with our strong operational leverage, broad product offering and organic growth investment projects, which remain on track and on budget,” he added.