Mondi has launched a €1.2 billion capital expenditure program across its corrugated and flexible packaging mills and converting plants to boost capacity

Mondi has launched a €1.2 billion capital expenditure program across its corrugated and flexible packaging mills and converting plants to boost capacity

The Pulp and Paper Times

2024 was marked by stubbornly challenging economic conditions, unresolved political uncertainties and persistent geopolitical tensions. Against this background, Mondi has focused on its customers, people and communities, and has been able to perform resiliently despite the somewhat soft demand and challenging pricing environment.

Mondi remains committed to creating value for stakeholders through the production of high-quality packaging and paper solutions that are sustainable by design. Mondi strategy is unchanged, and supported by its strong balance sheet and low-cost position. The Group was able to substantially complete the more significant elements of multi-year capital expenditure programme while continuing to support customers on their journeys towards sustainable solutions.

Mondi is a leading producer of corrugated packaging with a cost competitive asset base and strong customer offering focused on quality, reliability and service. We are the leading virgin containerboard producer in Europe and the largest containerboard producer in emerging Europe. Mondi is a global flexible packaging producer with a unique portfolio of solutions. Mondi primarily produce kraft paper which is converted into paper bags or used for specialist consumer or industrial applications. Its Uncoated Fine paper business produces a wide range of home, office, converting and professional printing papers at our mills in central Europe and South Africa.

Around 85% of Mondi’s revenue is derived from packaging markets, with the remaining 15% generated from our uncoated fine paper offering. Packaging growth is supported by the structural drivers of growing demand for sustainable solutions and eCommerce.

“We anticipate packaging market growth in the region of 2-4% per annum through-cycle. Furthermore, we see opportunities to outperform these market growth rates by leveraging our leading market positions, innovation capabilities and broad product offering across the Group.” The annual report of Mondi for FY 2024 said.

“Mondi demonstrated resilience during the year delivering an underlying EBITDA of €1,049 million, achieved against a backdrop of softness in demand and a challenging pricing environment. This performance highlights the strength of our cost competitive, strategically located integrated assets and our great people. Furthermore, our ability to adapt with agility and flexibility to market uncertainties, combined with our unwavering focus on product quality, reliability and innovation in offering a diverse portfolio of sustainable packaging and paper solutions, has been central to delivering value to our stakeholders,” Mr. Andrew King, Group CEO – Mondi stated in the report

The report said, Corrugated Packaging delivered an improved performance in the second half of the year when compared to the first half of the year. Margin expansion and an improvement in underlying EBITDA in the second half were driven by higher average selling prices which more than offset lower volumes as a result of a higher number of scheduled mill maintenance shuts compared to the first half. Excluding the one-off currency loss in the first half, Flexible Packaging's underlying EBITDA was down in the second half as higher average selling prices through the second half were offset by lower volumes and higher fixed costs from scheduled mill maintenance shuts. After a strong start to the year, Uncoated Fine Paper had a weaker second half of the year due to a forestry fair value loss, lower prices and scheduled mill maintenance shut impacts.

Providing information in the expansion plan, Mr. King said, “Over the last three years Mondi has undertaken a meaningful capital expenditure programme across both corrugated and flexible packaging mills and converting plants investing €1.2 billion in total to expand capacity, increase cost competitiveness and improve our environmental footprint. By the end of 2024 80% of the investment had been completed – on time and within budget. Five of the major capacity expansion projects, including the new paper machine at Štětí (Czech Republic) which commenced operations in December 2024, are now operational. Duino (Italy) remains on track to complete in the first half of 2025. Our focus turns to executing our operational and commercial strategy ensuring all these projects ramp up capacity efficiently to maximise value from our investments and deliver mid-teen returns through cycle.

“We also expanded our converting capacity, primarily through major box plant expansions at Warsaw and Simet (both Poland) and projects across Flexible Packaging. These include expanding our market-leading pet food packaging converting capability and a new extrusion line at Mondi Coating Štětí (Czech Republic) to support the growth of food and non-food contact packaging. With this investment and build phase largely complete, we are now focused on executing our operational and commercial strategy to ensure these capacity expansion projects ramp up efficiently to maximise value from our investments and deliver mid-teen returns through cycle,” Mr. King said.

2024 performance : Corrugated Packaging

Corrugated Packaging delivered an improved performance compared to 2023 with underlying EBITDA of €328 million and margin of 14.6% (2023: €310 million, 13.6%). The business exhibited good cost control, achieving a reduction in input costs which more than offset inflationary cost pressures. Performance in the second half of the year was stronger when compared to the first half mainly due to higher average selling prices.

In Containerboard, Mondi sales volumes was broadly flat compared to the prior year as the business continued to deliver its broad range of high-quality paper grades to customers. Mondi achieved selling price increases through the year before some modest reductions during the last quarter resulting in broadly similar average selling prices for the year compared to the prior year. We are currently implementing containerboard price increases.

In Corrugated Solutions, box volumes were broadly flat but improved over the year, with higher volumes in the second half compared to the first half supported by the growing demand for sustainable packaging solutions used in eCommerce and other consumer end-use applications.

Flexible Packaging

Flexible Packaging's underlying EBITDA was €558 million for the year with margin of 14.1% (2023: €637 million, 16.5%) as higher sales volumes and reduced input costs were offset by lower average selling prices and inflationary cost pressures. A €32 million one-off currency loss from the devaluation of the Egyptian pound, as previously reported, was also recognised in the first half of the year. Excluding this one-off loss, Flexible Packaging's underlying EBITDA was down in the second half as higher average selling prices through the second half were offset by lower volumes and higher fixed costs from scheduled mill maintenance shuts.

In Kraft Paper, improvements in market demand, supported by the drive for more sustainable solutions, led to higher sales volumes compared to 2023. While kraft paper selling prices increased during the first half and into the second half of the year, average prices for the year remained below the prior year's averages. In 2025, kraft paper has seen some early signs of improving demand with order books tightening, supporting price increase announcements.

Paper Bags increased sales volumes by 3% compared to the prior year. This was supported by the growing demand for traditional building material and cement applications across our main emerging markets served, as well as increasing demand for eCommerce solutions as our customers transition from plastic mailers to our paper-based MailerBAGs. Input costs were lower compared to the prior year primarily due to lower average kraft paper prices. This mitigated the impact of lower paper bag selling prices.
 

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