Mondi has reported a drop in half-yearly revenues and underlying core profit, as the British paper and packaging firm grapples with waning demand, customer destocking and falling prices amid higher input costs.
Its underlying core profit fell to €680 million in the six months ended June 30, from €942 million in the same period last year.
Group revenue fell to €3.88 billion in the same period, from €4.51 billion last year.
'So far in 2023, demand and prices have declined sequentially, with the exception of containerboard prices, which stabilised in the later part of the half year,' the company said in a statement.
The company said its Russian packaging operations generated a loss after tax of €4 million for the half-year period, due to an impairment charge of €97 million related to its largest plant in the country – Mondi Syktyvkar.
In June, Mondi had terminated a RUB 95 billion deal to sell the plant to an investment vehicle owned by Russian billionaire Viktor Kharitonin due to a 'lack of progress' in getting approvals.
'Challenging Market Conditions'
"Mondi's performance in the first half of 2023 reflects a strong delivery against a backdrop of challenging market conditions," commented Andrew King, chief executive. "Whilst underlying EBITDA was lower, the business exhibited strong cash generative characteristics, improving cash generation. We maintained a robust balance sheet and are continuing to invest in our pipeline of expansionary projects."
King added that the group remains focused on improving productivity and efficiency through its "MAP2030 commitments", while also expanding capacity.
"We have a compelling portfolio of sustainable packaging and paper products, scale and a resilient business model, which position us well to deliver attractive returns and sustainable value accretive growth," he said.
Additional reporting by ESM