Mondi's Q3 earnings decline amid weak macro-economic climate

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Mondi's Q3 earnings decline amid weak macro-economic climate
Credit: © Reuters.

FTSE 100 firm, Mondi (LON: MNDI ), reported a decrease in Q3 Ebitda due to a contracted forestry fair value gain of EUR14 million, a significant drop from the Q2 figure of EUR72 million. The results, announced on Thursday, were influenced by the sustained weak macro-economic climate leading to decreased demand and falling prices for heavy-duty kraft paper. This downward trend is expected to persist into Q4.

According to InvestingPro, Mondi's market capitalization stands at $7260.52M USD, with a P/E ratio of 7.87. The company's revenue for the last twelve months (LTM2023.Q2) was recorded at $9033.17M USD, indicating a slight growth of 1.0%. However, the quarterly revenue growth for FY2023.Q2 fell by 13.85%.

Despite lower average selling prices, the company managed to partially offset these losses through reduced input costs and strict fixed-cost control. The underlying earnings amounted to 261 million euros ($275.1 million), down from the previous year's EUR450 million and Q2's EUR329 million.

InvestingPro Tips reveal that Mondi's valuation implies a strong free cash flow yield and the stockholders receive high returns on book equity. The company, known for its financial stability, has maintained dividend payments for 17 consecutive years and recently raised its dividend for three consecutive years. Currently, the company's dividend yield stands at 4.7% as of Y2023.D292.

In other business segments, corrugated packaging prices remained stable with improving order books. The flexible packaging experienced further price and volume reductions in kraft paper. Uncoated fine paper pricing also suffered due to the ongoing weak demand.

Mondi's stock generally trades with low price volatility, and it is currently trading near its 52-week low. The company's return on assets for LTM2023.Q2 is 8.7%, and it is predicted to be profitable this year, according to InvestingPro Tips. These tips, along with others, are part of the InvestingPro product which offers numerous insights on various companies. For more such tips and insights, visit InvestingPro.

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