Mondi Q3 earnings fall on weak demand, lower prices

Third quarter core earnings at paper manufacturer Mondi fell 18% year on year as demand remained soft and prices weakened compared with the first half of the year.

Underlying earnings before interest, tax, depreciation and amortisation came in at €383m compared with €466m in the same period last year and 9% lower than the second quarter's €423m.

“Lower average selling prices from the highs reached towards the end of 2018 and into early 2019, coupled with the anticipated lower forestry fair value gain, more than offset the benefits of our ongoing profit improvement initiatives,” the company said on Thursday.

Average third quarter like-for-like sales volumes were marginally lower than the previous year as a result of lower industrial bags and uncoated fine paper volumes, partly offset by growth in corrugated packaging.

Planned mill maintenance shut downs during the quarter had an estimated impact on underlying EBITDA of around €40m and Mondi forecast a full year impact of €150m, up from €110m a year ago.

"As we entered the fourth quarter, prices were, on average, marginally below those of the third quarter. If sustained, the impact of this lower pricing is expected to be largely offset by an easing of pressure on the cost base, supported by our ongoing profit improvement initiatives," Mondi said.