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Sustainable packaging and paper leader delivers ‘resilient performance’

Home Manufacturing & Processing Pulp & Paper Sustainable packaging and paper leader delivers ‘resilient performance’

THE Mondi Group announced the company’s results for the 12 months to December 31, 2023, on February 22. Commenting on the results, Andrew King, Mondi Group CEO, said: “Mondi delivered a resilient performance in 2023 as a result of our compelling customer service and delivery, supported by our scale, quality asset base, integrated model and breadth of products, customers and end-markets.

“While underlying EBITDA of €1,201 million was lower than the very strong performance in the prior year, our cash generation remained ahead of last year at €1,312 million.

“This strong cash generation gives us the strategic flexibility to continue investing in our business through-cycle, supported by our confidence in the long-term structural growth of the markets we operate in and our leading positions within them. We continue to make good progress in delivering our organic growth projects, which remain on track and on budget. We expect these projects to deliver a meaningful EBITDA contribution from 2025.

“In the first quarter of 2024, selling prices are generally lower than the averages achieved in the second half of 2023. However, we are seeing improvements in our order books and are implementing price increases across our range of paper grades. Input costs remain elevated compared to historical levels but have broadly stabilised since the end of 2023.
“We remain well positioned to capitalise as demand improves with our strong operational leverage and organic growth investment projects.

“It is our continued confidence in the future of our business which has resulted in the Board recommending a total ordinary dividend for the year of 70.0 euro cents per share, in line with 2022,” King said.

Uncoated fine paper

Commenting on the performance of business units, King said: “Our uncoated fine paper business produces a wide range of home, office, converting and professional printing papers at our mills in central Europe and South Africa. We are the supplier of choice for our customers, leveraging our leading positions in these regions. In South Africa, we also produce and sell market pulp to customers around the world.

“Uncoated fine paper delivered underlying EBITDA of €289 million in the year, down 32% (2022: €427 million) largely due to lower selling prices. The underlying EBITDA margin was 22.4%. Our geographic and product diversification supported our performance with higher uncoated fine paper and pulp sales volumes in South Africa mitigating lower European volumes.

“European uncoated fine paper market demand was significantly lower compared to the prior year driven by weak economic conditions. Selling prices declined during the year, however the rate of decline slowed as we progressed through the period. We successfully implemented price increases in early 2024.

“In response to the ongoing structural decline in demand for uncoated fine paper in Europe, we streamlined production by permanently closing an uncoated fine paper machine at our unintegrated Neusiedler operations in Austria during the year.

“In South Africa, uncoated fine paper market conditions were broadly stable on the prior year. The business received income from an insurance claim in the year relating to the floods in South Africa during 2022.

“Pulp sales volumes were higher following the start-up of the rebuilt recovery boiler at our integrated Richards Bay mill (South Africa) in the prior year. Market pulp prices declined sharply during the year followed by modest increases towards the end of the year.

“Our uncoated fine paper business remains well placed, with our customers valuing us as a supplier of choice and recognising the strength of our leadership positions, underpinned by a broad product portfolio, integrated asset base and excellent service,” King said.

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