Packaging firm Mondi delivered a 'resilient' performance in the third quarter of its financial year, seeing strong demand for corrugated packaging and some recovery in industrial end-uses, the company said in a trading update.
Mondi saw good volume growth in corrugated solutions, driven by demand from e-commerce and consumer applications.
Currently, the company is discussing price increases with clients for various container board grades, backed by a strong order position and normalised inventory levels.
The demand for flexible packaging demand remained 'resilient' during the quarter, while volumes in the paper bags business saw year-on-year growth, Mondi added.
Andrew King, Group CEO, commented "I am pleased that sustainable packaging continues to be a focus for our customers.
"We continue to make good progress leveraging our award-winning innovation capabilities and customer-centric approach to optimise packaging design using ‘paper where possible, plastic when useful’."
The company’s underlying EBITDA for the third quarter amounted to €306 million, down 20% year-on-year on a comparable basis as lower average selling prices and negative currency effects more than offset lower costs.
Compared to the second quarter of 2020, the underlying EBITDA declined 13%.
The company witnessed good volume growth in uncoated fine paper and fibre-based packaging products.
Cost Control Measures
Mondi added that the ongoing strong cost control were more than offset by the impact of planned maintenance shuts, negative currency effects and lower average selling prices.
It implemented a set of measures to reduce the cost base, including the closure of a release liner plant in Pleasant Prairie in Wisconsin, US, and engaging with employee representatives on the restructuring of its personal care components focused operations in Gronau, Germany.
King added, “The decisive action we took in the early stages of the COVID-19 pandemic helped to protect our people, maintain the supply of essential products and services, and deliver a resilient performance.
"Our people have demonstrated their enterprise and commitment, taking care of colleagues, communities and customers in these unprecedented times."
After a strong first quarter performance, volumes in its consumer flexibles business were impacted by some supply chain de-stocking in the third quarter.
Demand in industrial and specialised end-uses continued to be affected by lockdown restrictions, particularly in the release liner category, the company added.
Gradual Pick-Up In Activity
The demand for uncoated fine paper improved as lockdown restrictions in Europe, Russia and Southern Africa eased with a gradual pick-up in activity in schools, offices and commercial printing.
Sales volumes increased significantly compared to the second quarter, although it was still down compared to the third quarter of 2019.
The average price of uncoated fine paper remained lower than in the first half of the year.
The uncoated fine paper business remains well-positioned in the context of the current market challenges given cost competitiveness, product diversification and geographic positioning, Mondi added.
Despite an uncertain macro-economic outlook, the company is confident that it will continue to demonstrate its resilience, while remaining well-positioned for recovery.
Mondi added that its confidence is based on its integrated high-quality, cost-advantaged asset base, culture of continuous improvement, portfolio of sustainable packaging solutions and the strategic flexibility offered by strong cash generation and financial position.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.