International packaging and paper group Mondi said earnings before interest tax depreciation and amortisation (Ebitda) increased 60% to €1.89 billion (R36.64bn) in the year to December 31, but warned that demand had softened so far this year.
The share price had fallen 3.14% to R310.19 on the JSE by yesterday afternoon.
CEO Andrew King said a strong performance across the business in 2022 had followed the delivery of innovative and sustainable packaging and paper solutions.
“Our integrated business model and strong operational performance enabled us to manage inflationary pressures and expand margins through price increase,” he said.
The Ebitda figure excludes the Russian operations, which are in the process of being sold. Profit before tax of €1.56bn increased by 119%. Cash generated from operations of €1.29bn had increased by 29%.
King said their €1bn expansionary capital investment pipeline was on track to deliver growth across the packaging businesses.
Good progress was also made on their sustainability roadmap, Mondi Action Plan 2030 (MAP2030). The sale of the Personal Care Components business was completed.
The full year dividend of 70 euro cents per share was 8% higher than the previous year’s payout.
King said strong growth in the “market-leading” Flexible Packaging business in the past year was particularly pleasing.
“Our innovative product offering means we can use paper where possible and plastic when useful to provide customers with a uniquely broad choice of flexible packaging solutions to meet their needs,” he said.
King said demand and pricing had softened in the early stages of this year, with destocking expected to continue through the first quarter.
“We remain confident of our compelling product portfolio and resilient business model. Our cash generation and strong balance sheet provide strategic flexibility, enabling us to meet growing customer demand for sustainable products and to continue to invest to strengthen our leading market positions,” he said.
He said energy costs increased sharply during the year, driven by higher gas and electricity prices in Europe. The impact was mitigated as most of the group paper and pulp mills generated most of their own energy needs, with around 80% of the fuels used in this process from biomass sources, and only around 10% of fuel sourced from natural gas.
Following record European energy prices in the third quarter of 2022, these fell sharply in the fourth quarter but were, on average, sequentially higher in the second half of the year.
Group fixed costs, excluding a higher non-cash forestry fair value gain of €169 million (2021: loss of €7 million), were well controlled although they increased year-on-year, said King.
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