Interim Management Statement

MONDI PLC - Interim Management Statement

PR Newswire

London, May 2

As part of the dual listed company structure, Mondi Limited and Mondi plc(together 'Mondi Group') notify both the JSE Limited and the London StockExchange of matters required to be disclosed under the JSE ListingsRequirements and/or the Disclosure and Transparency and Listing Rules of theUnited Kingdom Listing Authority.

Mondi Group: Interim Management Statement 3 May 2013

This interim management statement provides an update on the financialperformance and financial position of the Group since the year ended 31December 2012, based on management accounts up to 31 March 2013 and estimatedresults for April 2013. These results have not been audited or reviewed byMondi's external auditors.

Reviewed results for the half year ending 30 June 2013 will be published on oraround 8 August 2013.

Except as discussed in this interim management statement, there have been noother significant events or transactions impacting either the financialperformance or financial position of Mondi since 31 December 2012 up to thedate of this statement.

Group Performance Overview

Underlying operating profit for the first quarter of 2013 was EUR162 million,in line with our expectations despite the effects of a one-off write-down inthe value of green energy credits of EUR11 million. This reflects a 35%increase on the comparable prior year period (EUR120 million) and is in linewith the previous quarter (EUR163 million). The significant increase over thecomparable prior year period is a result of improved market conditions in thePackaging Paper and South African businesses, as well as the benefits from theacquisitions of Nordenia and the corrugated packaging plants in Germany and theCzech Republic completed towards the end of 2012.

Sales volumes were, on average, above those achieved in the previous quarter,whilst average benchmark selling prices across all grades in the Europeanbusinesses were largely unchanged. Selling price increases were realised inrecycled containerboard during the quarter and price increases for virgin andwhite-top containerboard have been announced for the second quarter of 2013.

Average input costs per unit of production in the quarter were similar to theprevious quarter and that of the comparable prior year period.

Currency effects have been mixed during the quarter with the Group benefitingfrom the weaker South African rand, Polish zloty and Czech koruna whilst thestronger Swedish krona and Russian rouble have impacted negatively on theGroup's cost base in those currencies.

Divisional Overview

Europe & International

Underlying operating profit in Packaging Paper was in line with that of theprevious quarter. The business benefited from increased sales volumes andgenerally stable pricing. However, during the quarter, a significant decline inthe market price of green energy credits, as a consequence of the uncertaintycreated by proposed changes to the regulatory environment surrounding renewableenergy in Poland, resulted in an EUR11 million write-down of the carrying valueof existing green energy credits in Poland. Based on prevailing market prices,the annual benefit from green energy credits in Poland would be approximatelyEUR20 million lower than that realised in 2012 (excluding the EUR11 millionone-off write-down).

Average benchmark selling prices for the quarter for virgin and white-topcontainerboard were similar to those of the previous quarter. Price increasesof EUR40/tonne for all virgin containerboard grades have been announced to takeeffect during the second quarter of 2013. Average prices for recycledcontainerboard were similar to those of the previous quarter with approximatelyEUR40/tonne of the announced EUR60/tonne increase having been realised towardsthe end of the quarter, whilst the cost of paper for recycling remained largelyunchanged. Containerboard sales volumes were above those of the previousquarter. The new recycled containerboard capacity in Poland previouslyhighlighted has not yet had any significant impact on markets.

Sack kraft paper prices were similar to those of the previous quarter. Demandremained stable with sales volumes well above those of the previous quarter,during which the majority of annual maintenance shuts took place.

Underlying operating profit in Fibre Packaging was in line with that achievedin the comparable prior year period but below that of the previous quarter.

Average selling prices and sales volumes in corrugated packaging were enhancedby the acquisition of the corrugated box plants in Germany and the CzechRepublic in the last quarter of 2012. Recent paper price increases are expectedto negatively impact margins in the second quarter of 2013.

The industrial bags business was in line with the comparable prior year periodimpacted by volume declines in Europe, offset by good demand in non-Europeanmarkets. Volumes are expected to improve going into the seasonally strongerEuropean summer months.

The Coatings business disappointed amidst some slower demand, margin pressuresand operational issues.

Consumer Packaging delivered stable returns during the quarter. Underlyingoperating profit was above that of the previous quarter's underlying result(before the EUR14 million of one-off costs recognised in the previous quarter),on the back of an increase in sales volumes, particularly in diaper components.Integration activities remain well on track with delivery of synergies in linewith expectations.

During the quarter, a decision was taken to close the Lindlar operation inGermany and redirect production to existing plants in Germany, Hungary and theCzech Republic. Restructuring and closure costs amounting to EUR9 million wererecognised as a special item.

Underlying operating profit for Uncoated Fine Paper was below that of theprevious quarter and the comparable prior year period mainly due to loweraverage selling prices. Sales volumes were above those of the previous quarteralthough order books weakened, particularly towards the end of the quarter. Theimpact of new capacity from competitors in Russia and France expected to comeon stream this year has not yet been seen in the market.

South Africa Division

Underlying operating profit in the South Africa Division was above that of theprior quarter, excluding the effects of a reduction in the gain on fair valueof forestry assets of EUR16 million versus the unusually high level in thepreceding quarter. The business continued to benefit from a positive domestictrading environment in uncoated fine paper and the weaker South African rand.Average selling prices increased during the period on marginally lower volumes.

The Division has taken the decision to close its woodchip export operations. Inaddition, as a result of the ongoing decline in domestic newsprint demand andreorganisation within the publishing sector, the decision has been taken toclose one of the two newsprint machines in Merebank. The newsprint businesswill continue to operate one newsprint machine with an annual productioncapacity of 120,000 tonnes per annum. In both cases, consultations withemployee representatives are in progress. Closure and associated millrestructuring costs are estimated at around EUR20 million, of which aroundEUR15 million is non-cash. These costs will be recorded as a special item inthe second quarter.

Financial position

Despite the normal seasonal increase in working capital and higher than averagecapital expenditure as a result of the Group's investment in its energy relatedprojects, which are proceeding to plan, net debt was EUR1,837 million at theend of the quarter, a reduction of EUR27 million from 31 December 2012.

Finance charges were similar to those of the previous quarter and above thecomparable prior year period reflecting the higher average net debt as aconsequence of the acquisitions completed in the fourth quarter of 2012.

The average maturity of the Group's committed debt facilities at 31 March 2013was 4.2 years. The Group had EUR763 million of committed, unutilised borrowingfacilities available at 31 March 2013.

Summary

The effects of expected capacity increases in recycled containerboard anduncoated fine paper, coupled with prevailing demand softness across theEuropean businesses, remain a concern. However, recent price increases in thepackaging paper grades provide support and good progress is being made inintegrating the Group's recent acquisitions. Management remains confident ofcontinuing to make progress, in line with its expectations.

Mondi is an international packaging and paper Group, with production operationsacross 30 countries and revenue of EUR5.8 billion in 2012. The Group's keyoperations are located in central Europe, Russia and South Africa and as at theend of 2012, Mondi Group employed 25,700 people.

Mondi Group is fully integrated across the paper and packaging process, fromthe growing of wood and the manufacture of pulp and paper (packaging paper anduncoated fine paper), to the conversion of packaging paper into corrugatedpackaging, industrial bags, extrusion coatings and release liner. Mondi is alsoa supplier of innovative consumer packaging solutions, advanced films andhygiene products components.

Mondi Group has a dual listed company structure, with a primary listing on theJSE Limited for Mondi Limited under the ticker code MND and a premium listingon the London Stock Exchange for Mondi plc, under the ticker code MNDI. TheGroup has been recognised for its sustainability through its inclusion in theFTSE4Good Global, European and UK Index Series (since 2008) and the JSE'sSocially Responsible Investment (SRI) Index since 2007. The Group was alsoincluded in the Carbon Disclosure Project's (CDP) FTSE350 Carbon DisclosureLeadership Index for the third year and in CDP's FTSE350 Carbon PerformanceLeadership Index for the first time in 2012.

Sponsor in South Africa: UBS South Africa (Pty) Ltd