Packaging and paper group Mondi LON:MNDI reported a decline in third-quarter earnings as weak demand, falling paper prices and planned maintenance outages weighed on performance, underscoring the continued pressure facing Europe’s industrial and consumer packaging markets.
The FTSE 100 company posted underlying EBITDA of €223 million for the three months to 30 September, including a €20 million forestry fair value gain, down from the previous quarter as softer market conditions persisted. Mondi cited subdued volumes and lower selling prices across most grades of pulp and paper, particularly in its corrugated and flexible packaging divisions.
Chief executive Andrew King said the group faced a “challenging trading environment” but stressed that management remained “relentlessly focused on managing the controllables,” including margin discipline, cost control and cash generation.
“These initiatives enable us to navigate current headwinds, build a stronger, more efficient operating platform and drive free cash flow,” King said. “This will protect value today and deliver enhanced returns when market conditions improve.”
Persistent weakness in European industrial demand
The quarter’s results reflect a broader softness in European industrial demand, with oversupply continuing to suppress pricing. Volumes were also constrained by extended maintenance shuts across several mills — a measure Mondi said was intended to balance output with demand and mitigate inventory build-up.
Underlying EBITDA fell from the second quarter in both the Corrugated and Flexible Packaging units, reversing gains made earlier in the year as price increases from the first half unwound. The Uncoated Fine Paper business suffered most acutely, hit by weak demand, aggressive price competition and the temporary shutdowns.
Mondi expects trading conditions to remain difficult through year-end, with fragile demand-side confidence and selling prices currently below third-quarter averages.
Mondi’s restructuring plans
From 1 October, Mondi will operate under a simplified two-division structure — Corrugated Packaging and Flexible Packaging — in a move designed to streamline decision-making and unlock operational synergies. The Uncoated Fine Paper segment has been folded into Corrugated Packaging, reflecting increasing integration between paper and packaging operations.
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Management said the reorganisation would “support faster decision-making, cost take-out and delivery of operational synergies” while retaining a strong customer focus.
The integration of Schumacher Packaging, acquired earlier this year, is progressing well. Mondi has now identified €32 million of cost synergies, up from an initial €22 million estimate, to be realised over three years. The acquisition expands Mondi’s European footprint and vertical integration capabilities, reinforcing its position in recycled corrugated packaging.
Capital discipline and outlook
Having completed a major investment cycle, Mondi’s capital spending will now shift toward maintenance and efficiency projects, the company said. All major expansion projects are operational, though profitability remains sensitive to market conditions. The group expects a net incremental EBITDA contribution of around €30 million in FY2025 from recently commissioned assets.
A feasibility study for a new sack kraft paper machine at Mondi’s Hinton mill in Canada has been completed, but the company has opted to delay the investment amid current market weakness. “We retain full optionality to invest and are well positioned to accelerate when conditions improve,” the group said.
Despite near-term pressure, Mondi remains confident in the long-term fundamentals of sustainable packaging. “Our well-invested, cost-advantaged and integrated asset base ensures Mondi is well placed to capture future growth and deliver value for shareholders,” King said.
