10th Oct 2019 07:30
(Alliance News) - Mondi PLC said Thursday its underlying earnings for the third quarter of 2019 dropped due to softer demand in markets lower prices for the group's key paper grades.
The paper and packaging industry - which is listed in both London and Johannesburg - said that for the three months to the end of September, underlying earnings before interest, taxes, depreciation and amortisation dropped 18% to EUR383 million from EUR466 million the year before.
Underlying Ebitda was also affected by a EUR40 million hit coming from planned mill maintenance shuts during the quarter.
During the period, lower average selling prices compared to the highs at the end of 2018, as well as the expected lower gain on forestry fair value, more than offset the fruits of Mondi's product improvement initiatives.
Like-for-like sales volumes were, on average, slightly lower than the prior year due to lower industrial bags and uncoated fine paper volumes, despite growth in corrugated packaging.
In Mondi's Fibre Packaging unit, corrugated packaging volumes grew, however demand for sack kraft paper was weaker, affecting both pricing and volumes. Industrial bag volumes were lower year-on-year, however Mondi said over the past six week there was an improvement in order books.
The Consumer Packaging business made steady progress in the quarter. Uncoated Fine Paper, however, struggled under lower prices in fine paper and pulp selling, as well as the lower forestry fair value gain.
Looking ahead, Mondi expects planned mill maintenance shuts to have an EUR150 million effect on underlying Ebitda for 2019 as a whole, up from a EUR110 million hit incurred the year before.
In addition, the group said prices in the fourth quarter were marginally lower than in the third quarter.
By Dayo Laniyan; [email protected]
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