Packaging and paper group's third-quarter earnings slipped once one-off forestry gains are stripped out, sending shares sharply lower.
Shares in packaging and paper group Mondi (LSE: MNDI) fell around 5% shortly after Thursday's open after the company flagged a dip in underlying third-quarter earnings, with higher energy and wood costs and planned maintenance work eating into the benefit of recent price increases.
Headline underlying EBITDA for the quarter came in at €196m, up from €167m in the prior quarter, but Mondi said the comparison was flattered by swings in the value of its forestry assets. Strip those out and underlying earnings actually fell, a trend the group pinned mainly on scheduled maintenance shutdowns and input costs running hotter than expected, particularly for energy and wood in Central and Eastern Europe.
The update adds to a difficult run for Mondi, whose operating margin has shrunk by around two-thirds over the past three years as cost pressures have squeezed the business. Performance diverged across its operations: packaging grades enjoyed firmer pricing on the back of strong order books, while fine paper struggled against weaker, seasonal demand.
Mondi said it had pushed through further price increases across several paper grades, with the financial benefit expected to materialise late this year and into 2027. The group is also pressing ahead with a restructuring of its converting operations, closing some plants and selling others as it tries to sharpen efficiency and competitiveness.
Investors appeared unconvinced that these measures go far enough to offset the margin pressure, with the stock marked sharply lower in early trading. Attention now turns to whether the announced price rises can flow through quickly enough to offset persistent energy and wood cost inflation in Central and Eastern Europe.
This report is based on Mondi’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Ant Rozetsky on Unsplash.
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