Our opinion on the current state of MONDIPLC(MNP)Mondi (MNP) is a large international paper and packaging company that originated in South Africa but now operates in 30 countries, employing 26,000 people across approximately 100 sites. The company is involved in the full spectrum of packaging, including owning and managing forests, and producing wood pulp, paper, and plastic films for a wide variety of packaging solutions. Mondi is known for its professional management and broad operational scope.
The company was impacted by the Ukraine crisis. On 28th February 2022, Mondi reported that around 12% of its revenue came from its Russian operations, including its high-margin, cost-competitive pulp and paper mill in Syktyvkar. However, Mondi decided to divest all of its Russian assets, which had a net asset value (NAV) of €687 million at the end of 2021. On 12th August 2022, Mondi completed the sale of its Russian subsidiary for about R25 billion, which led to a sharp increase in the share price. Prior to this, Mondi had sold its personal care business for €615 million on 1st July 2022.
For the six months ending 30th June 2024, Mondi reported revenue down 4% and earnings per share (EPS) down 30%. Despite these declines, the company highlighted an underlying EBITDA of €565 million, which was lower than the previous period but still reflected an encouraging performance supported by improving market conditions, stronger order books, and higher sales volumes. In its update for the third quarter ending 30th September 2024, Mondi reported underlying EBITDA of €223 million, down from €351 million in Q2 2024, primarily due to planned maintenance shutdowns and a forestry fair value loss.
Mondi remains a blue-chip company, but the paper and packaging business is challenging, which makes the stock volatile. Technically, Mondi’s share price had been in a strong upward trend after March 2020 but was derailed by the Ukraine situation in March 2022. Since then, the stock has been moving sideways and upward with significant volatility.
In March 2024, Mondi announced the acquisition of 54% of LSE-listed DS Smith Plc for GBP5.14 billion, and on 9th October 2024, the company further expanded by acquiring the packaging assets of Schumacher Packaging for €634 million. These acquisitions indicate Mondi's strategic efforts to grow its presence in the global packaging sector, despite the challenging environment.
While Mondi is fundamentally strong, its exposure to global economic cycles, particularly in the packaging and commodities sector, means the stock will continue to be volatile.
