Mondi flags persistent demand slump as shares hit decade-low in packaging sector

UK – Mondi, a major player in sustainable packaging and paper products, saw its shares drop over 17% in a single trading session on Monday, marking the lowest point in more than 12 years. 

The plunge followed the company’s release of a cautious third-quarter update, which highlighted subdued volumes and declining prices in key pulp and paper categories.

Underlying core profit for the quarter slid to €223 million (US$243 million), a decrease from €274 million (US$299 million) in the prior period. 

The firm pointed to weak market conditions, with sales volumes staying flat and prices easing in segments like fine paper and corrugated packaging.

Andrew King, Mondi’s CEO, noted during an analyst call that packaging demand had held steady without further deterioration, though the fine paper area continued to face headwinds.

The announcement rippled through the industry, pulling down shares of European competitors such as Enso, UPM, and SCA, each falling between 5% and 8%. 

In the U.S., International Paper and Smurfit WestRock saw premarket declines of about 4%, signaling broader investor unease over sector stability.

Analysts reacted swiftly to the news. A report by J.P. Morgan described the corrugated market as stuck at low levels, leading to a downgrade of Mondi’s rating from overweight to neutral.

Jefferies adjusted its projections, estimating 2025 underlying core earnings at €1 billion to €1.05 billion (US$1.09 billion to US$1.14 billion), short of the €1.16 billion (US$1.27 billion) consensus from LSEG.

In response to the pressures, Mondi outlined structural changes to streamline operations. 

The company will consolidate into two business units, integrating uncoated fine paper into its corrugated division to cut costs and improve efficiency. 

It also postponed a planned investment in a new paper machine at its Canadian pulp mill, redirecting resources toward cash preservation and maintenance spending.

This shift comes after completing most expansion projects, with future capital outlays now aimed at upkeep rather than new builds. 

King stated that the focus remains on generating cash in a tough environment, adding that the team expects ongoing challenges through the year.

The packaging sector grapples with excess supply in major markets, reduced industrial activity in Europe, and intense price competition, all squeezing margins. 

Without a pickup in consumer spending or manufacturing output, relief appears distant. Market watchers await further earnings reports from peers for clues on demand trends and pricing dynamics

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