EXTRA: Mondi shares hammered after missing estimates in third quarter

Shares in Mondi PLC on Thursday took a beating after its third-quarter performance fell short of expectations, with elevated input costs casting a shadow over the final three months of 2026.

The Weybridge, England-based packaging company reported on Thursday that its underlying earnings before interest, tax, depreciation and amortisation was EUR196 million in the three months that ended September 30, up 17% from EUR167 million a year before.

This underlying Ebitda, a key measure of underlying profitability, included nil forestry fair value gain.

Excluding forestry fair value, underlying Ebitda was lower sequentially, due mainly to planned maintenance shuts, Mondi said.

The firm said forestry fair value gain was nil in the third quarter, significantly impacted by the recent increase in energy prices.

Energy prices have risen dramatically due to the ongoing conflict in the Middle East that started late in February when the US and Israel launched joint airstrikes on Iran.

Energy prices remain highly volatile and hard to predict, Mondi said, adding: "However, if current prices prevail, and in particular, South African diesel prices, we expect nil forestry fair value gain in the fourth quarter."

Mondi shares ended down 7.9% to 753.00 pence each in London on Thursday and shed 9.1% to ZAR163.29 in Johannesburg.

Panmure Liberum said forestry guidance was missed in the first half of 2026, after Mondi guided for a forestry gain in the second half of this year.

"Q3 came in at nil and Q4 is guided at nil due to energy prices. We expect consensus to come under pressure," Panmure Liberum analyst Joe Brent predicted.

Energy and wood prices continue to be high, Brent said, but there is a lag in passing on input costs.

"That said management continues to take cost actions, transferring customer volumes from the converted plants scheduled to close this year, and an additional converting plant sold in September," the Panmure Liberum analyst said.

Mondi said on Thursday it had announced further price hikes for a number of paper grades during the third quarter, with the benefit expected towards the end of this year and into 2027.

"We continue to see strong prospects, due to 'paperisation' and notably in flexible packaging, as e-commerce and FMCG demand continues to increase," Panmure Liberum's Brent said.

Panmure Liberum' does not think the market attributes sufficient attention to Mondi's flexible packaging, noting it sees the business as well invested and operationally geared to recovery.

Davy Research also noted that Mondi's flexible packaging division delivered a "more robust" set of results for the third quarter, supported by what management described as resilient order books and pricing actions.

In the new enlarged corrugated packaging division, Mondi noted that while pricing actions had managed to offset input costs at the mill level, competitive pressures and the lag effect of passing on paper prices to the box price had negatively affected margins at the level of the corrugator, Davy analyst Ciaran Mulqueen said.

Mulqueen said Mondi reported weaker-than-expected adjusted Ebitda in the third quarter, driven by higher energy cost inflation. This was 6.2% lower than consensus Visible Alpha consensus.

Jefferies said third-quarter Ebitda was 4% below its estimate and was lower than the buy-side range of between EUR200 million and EUR210 million.

On Thursday, Mondi said it remains focused on "operational excellence, cost optimisation and improving the efficiency of our plant network to help mitigate fixed-cost inflation and strengthen the competitiveness of the business".

The company said it continues to make "good" progress transferring customer volumes from the converting plants scheduled to close later this year.

"As a further step to optimise our converting plant network, at the end of September, we sold one solid board converting plant and agreed the sale of a second," it said, signalling it continues to evaluate opportunities to optimise its asset portfolio.

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