Mondi half-year EBITDA up 66%, debt down to €1.22bn

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JSE-listed packaging and papers group Mondi reported a 66% year-on-year increase in its underlying earnings before interest, tax, depreciation and amortization (EBITDA) from continuing operations to 942 million euros for the six months ended June 30.

Net debt from continuing operations at the end of the reporting period was €1.22 billion, compared to €1.69 billion as of December 31, 2021, reflecting the group’s strong cash-generating capacity, the divestiture of Personal Care Components and continued investment in the business, including increasing working capital.

Mondi has delivered strong performance in the first half of this year and is in a strong financial position, Mondi CEO said Andrew King said August 4th.

Pre-tax income amounted to 933 million euros, up 164% year-on-year. Core operating profit was €0.99 per share, up 85% year-on-year.

After taking into account the effect of exceptional items, basic earnings from continuing operations amounted to €1.48 per share, up 173% compared to the previous comparable period.

“An interim dividend of €22 per share was declared, up 8% year-on-year. The group has a solid financial position, with a net debt to underlying Ebitda of 0.8x as of June 30, 2022, providing the strategic flexibility to pursue new organic growth projects, merger and development opportunities. acquisition and/or additional distributions to shareholders, consistent with our long-established capital allocation framework,” the company said in its earnings release.

Additionally, the impact of planned maintenance shutdowns on Underlying EBITDA during the period was approximately €40 million, compared to €25 million during the same period in 2021. Based on prevailing market prices, Mondi estimates the full year impact on underlying EBITDA. of its planned maintenance stops at around 100 million euros, compared to 140 million euros in the first half of 2021.

“Our vertical integration, organizational agility and close collaboration with our customers enabled us to deliver at a time when supply chains continued to be disrupted around the world. We achieved strong price realization, while maintaining tight cost control, amid strong inflationary pressures,” King said.

The company finalized the sale of the Personal Care Components business at the end of June for an enterprise value of 615 million euros, allowing it to focus more on its strategic priority of growth in sustainable packaging.

Following the sale, Mondi recognized a pre-tax gain on disposal of €246 million.

In addition, the group’s continuing operations have a strong liquidity position of approximately €1.6 billion, comprising €757 million of undrawn committed credit facilities and net cash of €870 million. . The weighted average maturity of its committed credit facilities is 3.8 years, it said.

Input costs were significantly higher than in all of 2021 due to significantly higher costs for energy, wood, resins, transportation, chemicals and paper for recycling. Energy costs were driven by sharp increases in gas and electricity prices in Europe.

“Our pulp and paper mills generate most of their energy needs internally, with biomass sources accounting for approximately 80% of the fuels used in this process, mitigating the impact of significantly rising external fuel costs.

“Looking ahead, pricing remains strong at the start of the second half, although we expect continued inflationary pressures on our cost base and continued supply chain challenges. Although significant geopolitical and macroeconomic uncertainties remain, we expect a year of good progress,” noted King.

In addition, Mondi’s packaging business continued to demonstrate the benefits of its integrated value chain, its portfolio of innovative and sustainable packaging solutions, and its focus on quality and service. Uncoated fine papers performance recovered strongly, benefiting from the successful commissioning of the rebuilt recovery boiler at Richards Bay in early 2022 and good pricing momentum across all markets.

Demand for sustainable products continues to grow as brands and consumers want to contribute to a low-carbon, circular economy. Mondi’s conversations with customers focus on how to design effective solutions that fit their goals and help convey and meet their sustainability commitments, the company said.

“Sustainable packaging remains a key priority for our customers and society at large. We are well positioned to help our customers achieve their environmental goals with circular solutions that are sustainable by design, a unique product portfolio, superior technical know-how, expertise in understanding the best material choices and design capabilities. ‘cutting-edge innovation,’ King said.

“Looking ahead, we continue to see the opportunity to accelerate the growth of our packaging business by supporting our customers and strengthening our leadership positions in our growth markets. We have an ambitious expansionary capital investment program to support this growth.

“Mondi remains well positioned to deliver sustainably into the future, supported by our cost-effective integrated asset base, our culture of continuous improvement, our portfolio of sustainable packaging solutions and the strategic flexibility offered by our strong generation of cash flow and our financial position,” King said.

Additionally, Mondi’s Russian assets and operations have been classified as held for sale and presented as discontinued operations. The transfer process is underway. Divesting such large assets is operationally and structurally complex and is being undertaken in an evolving political and regulatory environment.

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