DURBAN - Packaging and paper group Mondi's third quarter earnings to end September have declined, due to slow demand and lower prices for its products.
Yesterday, the JSE-listed group said underlying earnings before interest, tax, depreciation and amortisation (Ebitda) were down by 18percent to 383million (R6.39billion) compared to 466m reported in the same quarter last year.
Third quarter Ebitda was also down compared to the second quarter earnings of 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 its ongoing profit improvement initiatives,” the group said.
The group's like-for-like sales volumes were, on average, marginally lower than the comparable prior year period as a result of lower industrial bags and uncoated fine paper volumes. It said this was partly offset by growth in corrugated packaging.
“On average, costs were higher than the comparable prior year period, although lower than the previous quarter,” Mondi said.
Mondi had planned mill maintenance shutdown during the quarter and had an estimated impact on underlying Ebitda of around 40m, up compared to last year’s 30m.
“Based on prevailing market prices, we continue to estimate that the impact of planned mill maintenance shuts on underlying Ebitda for 2019 will be around 150m, up from 110m compared to last year,” the group said.
In the fibre packaging division, it said container boards showed signs of stabilising during the quarter, following the sharp price erosion seen in the first half of the year.
Mondi completed the sale of a specialised extrusion coated products plant in Duffel, Belgium, at the end of September.
In the consumer packaging division, the group said it made steady progress, benefiting from product innovation and continuous improvement initiatives during the quarter.
In the uncoated fine paper division, it saw lower average uncoated fine paper during the quarter, significantly lower pulp selling prices and, as anticipated, a materially lower forestry fair value gain.
Looking ahead to the fourth quarter, the group said prices were on average marginally below those of the third quarter.
Mondi shares closed 1.81percent higher at the JSE at R291.80 yesterday.