Our opinion on the current state of MONDIPLC(MNP)
Mondi (MNP) is a massive international paper and packaging company that started in South Africa but now operates in 30 countries and employs 26,000 people at about 100 sites. The company covers the full spectrum of packaging and is extremely professionally managed. Mondi owns and runs forests, produces wood pulp, paper, and plastic films for a wide variety of packaging solutions.
The company has been impacted by developments in the Ukraine crisis. In an update on 28th February 2022, Mondi stated, "Mondi has operations in Russia, representing around 12% of the Group's revenue by location of production, including a high-margin, cost-competitive, integrated pulp, packaging paper and uncoated fine paper mill located in Syktyvkar (Komi Republic)." Mondi decided to divest itself of all its Russian holdings, which had a net asset value (NAV) of 687 million euros as of 31st December 2021.
On 1st July 2022, the company announced that it had completed the sale of its personal care business for 615 million euros. On 12th August 2022, Mondi announced that it had sold its Russian subsidiary for about R25 billion, which caused the share price to jump.
In its results for the six months to 30th June 2024, the company reported revenue down 4% and earnings per share (EPS) down 30%. Mondi stated, "Our underlying EBITDA of €565 million in the first six months, although lower than the comparable period last year, reflected an encouraging performance, supported by improving market conditions resulting in stronger order books and higher sales volumes."
In our view, Mondi is a blue-chip company, though it operates in a volatile sector due to the nature of the paper and packaging industry. Technically, the share was in a strong upward trend after March 2020, but the Ukraine situation in March 2022 derailed this trend. Since then, the share has been moving sideways, but there is now evidence of a new upward trend emerging. We expect this trend to continue as the global shift to online shopping increases demand for packaging materials.
In March 2024, Mondi announced that it would acquire 54% of LSE-listed DS Smith Plc for GBP5.14 billion. On 9th October 2024, Mondi announced that it had acquired the packaging assets of Schumacher Packaging for 634 million euros.
The company has been impacted by developments in the Ukraine crisis. In an update on 28th February 2022, Mondi stated, "Mondi has operations in Russia, representing around 12% of the Group's revenue by location of production, including a high-margin, cost-competitive, integrated pulp, packaging paper and uncoated fine paper mill located in Syktyvkar (Komi Republic)." Mondi decided to divest itself of all its Russian holdings, which had a net asset value (NAV) of 687 million euros as of 31st December 2021.
On 1st July 2022, the company announced that it had completed the sale of its personal care business for 615 million euros. On 12th August 2022, Mondi announced that it had sold its Russian subsidiary for about R25 billion, which caused the share price to jump.
In its results for the six months to 30th June 2024, the company reported revenue down 4% and earnings per share (EPS) down 30%. Mondi stated, "Our underlying EBITDA of €565 million in the first six months, although lower than the comparable period last year, reflected an encouraging performance, supported by improving market conditions resulting in stronger order books and higher sales volumes."
In our view, Mondi is a blue-chip company, though it operates in a volatile sector due to the nature of the paper and packaging industry. Technically, the share was in a strong upward trend after March 2020, but the Ukraine situation in March 2022 derailed this trend. Since then, the share has been moving sideways, but there is now evidence of a new upward trend emerging. We expect this trend to continue as the global shift to online shopping increases demand for packaging materials.
In March 2024, Mondi announced that it would acquire 54% of LSE-listed DS Smith Plc for GBP5.14 billion. On 9th October 2024, Mondi announced that it had acquired the packaging assets of Schumacher Packaging for 634 million euros.
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