UK Packaging Firm Mondi Sees Subdued Demand For Rest Of Year

By Reuters
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UK Packaging Firm Mondi Sees Subdued Demand For Rest Of Year

British paper and packaging group Mondi said in a trading update that demand in the third quarter remained weak and is expected to stay subdued in the final quarter of the year.

Mondi's London-listed shares fell nearly 6% by 07:28 GMT on the bleak outlook and as the company flagged a sustained decline in prices of kraft paper – used by e-commerce and industrial customers for packaging.

Shares of peer DS Smith also dropped 2.4%, listing among the top losers on the FTSE 100 index.

"We expect this trend to continue through the final quarter of the year along with stabilising input costs and a greater impact from maintenance and project-related shuts," Mondi chief executive, Andrew King, said in a statement.



Analysts at JPMorgan said continued decline in kraft paper volumes and higher maintenance activity suggested the fourth quarter would be worse than the third, implying that Mondi would slightly miss market expectations for annual core profit.

Analysts on average expected underlying core profit of €1.24 billion for the year ending 31 December, according to a company-compiled consensus as of 29 August.

The group posted third-quarter underlying core profit of €261 million ($274.8 million), lower than the prior quarter due to a "much-reduced" fair value gain for its forestry assets.

King added, "Our €1.2 billion expansionary capital projects pipeline remains on track and within budget. We remain confident in the structural growth of the packaging markets we serve, underpinned by a growing demand for sustainable packaging solutions, and continue to invest in the future growth of Mondi."


In September of this year, the British paper and packaging firm agreed to sell its largest plant in Russia to a unit of Sezar Group, a Moscow-based real estate development firm, for RUB 80 billion (€770 million) in cash.

News by Reuters, additional reporting by ESM.

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