UK-listed paper group Mondi saw a continued improvement in market conditions in the first quarter with stronger order books leading to higher sales volumes across its range of paper grades compared with the fourth quarter.
Mondi, a global leader in the production of sustainable packaging and paper, said this was supported by a solid performance in its downstream converting operations.
Average selling prices in the quarter ended March were lower than those in the fourth quarter of 2023; however, recently announced paper price increases were starting to come through in the second quarter, the company said in a statement on Friday.
Costs remained broadly stable when compared with the fourth quarter, it said.
Underlying earnings before interest, tax, depreciation and amortisation (ebitda) were in line with the group’s expectations at €214m compared with €260m in the previous quarter, which includes a one-off €32m loss incurred in the period from the devaluation of the Egyptian pound.
In Corrugated Packaging, containerboard sales volumes were higher than the fourth quarter, and corrugated solutions delivered a stable performance, it said.
Flexible Packaging experienced good sales volume growth, which was largely offset by lower average selling prices. Uncoated Fine Paper benefited from price increases implemented in the quarter; however, a lower forestry fair value gain affected comparative performance.
During the quarter, 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 special dividend was accompanied by a share consolidation where shareholders received 10 new ordinary shares for every 11 held.
“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, said CEO Andrew King.
“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,” King said.
Earlier in April the group announced it had bowed out of its bid to take over UK paper, packaging and recycling group DS Smith after announcing the £5bn deal, in principle, earlier in 2024.
The move came after a rival bid by International Paper, which made an all-share offer that was higher than Mondi’s.
Rather than entering a bidding war with International Paper, Mondi’s board said: “Following a period of due diligence, and after carefully considering the value the combination with DS Smith would deliver to Mondi’s shareholders, the Mondi board has decided that the transaction would not be in the best interests of its shareholders.”
Having successfully implemented price increases in uncoated fine paper early in 2024, Mondi announced price increases in February across its range of containerboard grades and was gearing up to implement price increases in kraft paper, which it expected to take effect from the second quarter of 2024.
Mondi, formed in SA under Anglo American in 1967, demerged in July 2007 and listed on the LSE.
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