The pain lingers for long-suffering shareholders in packaging and paper producer Mondi (MNDI). Shares in the containerboard-to-paper bag maker have shed 65% of their value over the past five years and are down over 15% year-to-date.
Mondi was the biggest FTSE 100 faller on Friday morning after a Q1 earnings miss sent investors heading for the exits.
In a poorly-received update, the Weybridge-headquartered firm also warned it has experienced increased energy, raw material and logistics costs across the business. Mondi is responding to increased costs from the Iran war by hiking prices. But investors will have to wait until Q3 before they start to see benefits reflected in the numbers.
Profits under pressure
For the uninitiated, Mondi supplies containerboard, industrial paper bags, printing papers and other packaging solutions to an array of industries ranging from ecommerce and retail to pet care and publishing.
Market conditions in the first quarter of 2026 ‘remained challenging’, said Mondi, resulting in a quarter-on-quarter reduction in underlying EBITDA from €214 million to €212 million. That figure is almost 30% below the €290 million generated in Q1 of FY25.
Even before the Middle East conflict impacted global supply chains and reignited inflationary pressures, Mondi faced stiff headwinds. The FTSE 100 company has been seeking to cut costs through layoffs and plant closures amid a protracted industry-wide demand slowdown.
In the Q1 update, Mondi warned the Iran war has ‘further increased volatility in an already complex operating environment’.
Pushing up prices
CEO Andrew King commented: ‘Against a backdrop of challenging market conditions, sales volumes increased, although lower selling prices and latterly, cost pressures linked to escalating geopolitical tensions, weighed on underlying EBITDA.
‘These pressures persist into the second quarter and we are taking pricing actions to mitigate their impact. While there is an inherent time lag, we expect these measures to take full effect in the third quarter.’
Has the plunge in Mondi’s share price to fresh five-year lows created a buying opportunity for bargain hunters, one might ask? We don’t think so.
Fragile consumer and industrial confidence driven by macroeconomic uncertainty and geopolitical tensions continue to weigh on demand in many of Mondi’s core markets. These cyclical pressures have been exacerbated by supply side changes in capacity, notably in recycled containerboard and pulp.
The company is seeing weak demand, while rising costs are putting the squeeze on margins, so there could be more downgrade-driven pain to come. On a trailing twelve-month price-to-earnings ratio of 26 times, Mondi’s shares are pricier than the industry average of 13.5 times and could suffer a further de-rating. Avoid.
Read the press release here: https://www.mondigroup.com/investors/regulatory-news/
You might also like these stories:
