6th Oct 2025 17:43
(Alliance News) - Shares in Mondi PLC on Monday tumbled after posting a "shocker" third-quarter operational performance.
The Weybridge, England-based packaging firm shed 16% to 879.60 pence in London, and fell by the same percentage margin in Johannesburg to ZAR203.57.
The share performance suggested that investors were caught off-guard about the severity of challenging trading conditions facing packaging companies like Mondi.
With GBP3.94 billion in market capitalication, Mondi is one of the biggest packaging companies in the world.
The global packaging industry is a typical cyclical, humming along when the economy is booming, but ailing when growth catches cold.
For the third quarter of 2025, Mondi said its underlying earnings before interest, taxes, depreciation and amortisation fell 19% to EUR223 million from EUR274 million in the second quarter, but was flat compared to the third quarter last year. It blamed subdued demand and lower prices.
Ebitda is a key measure of underlying profitability.
Mondi said on Monday the trading environment in the third quarter remained "challenging", noting that volumes were hit by subdued demand and paper selling prices declined.
Late in July, Mondi said, presenting its first-half results for 2025, that there was a limited direct impact on its operations from announced tariffs.
While only 2% to 3% of its revenue is generated from exports into the US, the group at the time warned that it remained "mindful of the second order impacts affecting trade flows, consumer confidence and supply chains".
It remains to be seen whether the global tariff tensions are catching up with Mondi.
Fair value gain was not enough to offset sluggish demand.
Forestry fair value gain for was EUR20 million on-quarter, up 25% from EUR16 million. In the third quarter last year, it booked forestry fair value loss of EUR15 million.
Given the share price reaction, investors are worried about the bigger picture and whether Mondi's third-quarter update signalled a "sustained period of weakness".
Mondi on Monday dropped a hint.
For the remainder of this year, it expects challenging trading conditions to persist, as demand-side confidence remains fragile, key markets remain in oversupply and current selling prices are lower than third quarter average selling prices.
Packaging companies like Mondi are economic bellwethers, Coatsworth said.
"A strong economy normally implies a steady flow of goods around the world; a weakening economy often leads to reduced demand for goods and therefore for the packaging that holds them," he said and added: "Mondi has issued a shocker of a trading update, causing its share price to slump and hit a 12-year low."
"Mondi is well versed to operating in a cyclical market and there are a few levers it can pull, such as extending maintenance shutdowns," the AJ Bell analyst said.
Amid tough trading conditions, Mondi has gone into re-organisation mode.
With effect from October 1, Mondi said it had re-organised itself into two business units - corrugated packaging and flexible packaging.
It combined uncoated fine paper with corrugated packaging to form an enlarged corrugated packaging business unit. Flexible packaging remains unchanged.
Mondi is sharpening its focus on cost controls.
"Across the group, we remain relentlessly focused on managing the controllables," Mondi Chief Executive Officer Andrew King said, highlighting its emphasis on margin management and rigorous cost optimisation.
"These initiatives enable us to navigate current headwinds, build a stronger, more efficient operating platform and drive free cash flow. This will protect value today and deliver enhanced returns when market conditions improve," King said.
By Artwell Dlamini, Alliance News senior reporter South Africa
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