Mondi (LON:MNDI) executives struck a confident but cautious tone on the company’s full-year 2025 results call, pointing to resilient earnings and stronger operating cash flow despite what management described as a prolonged cyclical downturn in packaging and paper markets. Group CEO Andrew King said Mondi delivered EUR 1.0 billion of underlying EBITDA, marginally lower than the prior year, while cash generated from operations rose to EUR 1.07 billion as the company tightened working capital and reduced capital spending below prior guidance.
Management emphasized that performance reflected the benefits of Mondi’s integrated asset base, its product offering, and what King called “self-help measures” focused on cost discipline, operational excellence, production footprint optimization, and cash generation. CFO Mike Powell noted that recent capacity expansion projects and the Schumacher acquisition increased the group’s capital base, lifting depreciation and finance costs and weighing on basic underlying EPS and returns in 2025.
Financial performance and cash flow
Powell added that in the first quarter of 2026, overall input costs were tracking flat versus 2025, though Mondi is facing headwinds from lower energy-related income and emissions credits. He also cited a forestry fair value gain that was EUR 32 million higher than the prior year.
Operating cash flow strengthened to EUR 1.072 billion, which Powell attributed to strong working capital management. Mondi reported a working capital inflow of EUR 83 million for the full year, after an outflow in the first half and an inflow in the second half. The company invested EUR 673 million in property, plant, and equipment—below the prior EUR 750 million to EUR 850 million guidance—paid EUR 352 million in dividends, and completed the Schumacher acquisition.
Net debt ended the year at EUR 2.6 billion, representing 2.6x leverage, according to management. Powell said Mondi maintains investment-grade ratings, about EUR 1.3 billion of liquidity, and no debt maturities until 2028 following refinancing activity. He also noted Mondi has no financial covenants.
Cost actions, restructuring, and plant footprint optimization
Management highlighted a broad cost and efficiency program, including headcount reductions. Powell said Mondi reduced headcount by approximately 1,000 over the last 12 months, driven by greater operational efficiency, plant closures, and a roughly 13% reduction in group services offices. Mondi has also announced three further plant closures expected to reduce headcount by around 200 in the coming year.
The company combined its corrugated packaging and uncoated fine paper businesses into a single business unit, which Powell said supports streamlined decision-making, cost takeout, and operational synergies across pulp and paper mills while retaining customer focus. For 2026, Powell said he expects the actions taken to offset labor and other cost inflation, with the fixed-cost base expected to be flat.
In the Q&A, King said the three recently announced plant closures are in Hungary, Germany, and Turkey, and reiterated the company’s willingness to make further footprint decisions if they improve efficiency while continuing to meet customer needs. Asked specifically about paper mill rationalization, King said Mondi’s cost position is a key value driver, and identified the Duino mill in Italy as currently loss-making because it is not yet optimized and is still ramping up, while also operating against difficult market dynamics. He characterized Duino as a “mid-cost producer” once fully optimized and said Mondi also requires some recycled containerboard for security of supply into its box business.
Capital allocation: lower CapEx and dividend reset
Mondi reduced its cash capital expenditure outlook for 2026 to approximately EUR 550 million, down from earlier guidance of EUR 650 million. Powell said the figure includes about EUR 50 million of remaining cash outflow tied to growth projects, implying a base spend around EUR 500 million focused on maintenance and targeted cost optimization (including energy efficiency, productivity, and resilience). In response to analyst questions, both King and Powell said they were comfortable operating at around 100% to 110% of depreciation and stated they were not deferring issues into 2027.
On shareholder returns, Powell said the board recommended a total ordinary dividend of EUR 0.2825 per share for 2025, describing it as a return to the company’s stated dividend cover policy of 2x to 3x underlying earnings on average through the cycle, after dividends above policy in the previous two years.
Market conditions and business unit commentary
King said corrugated packaging margins remained under pressure due to supply-demand imbalance and intense competition, noting that higher input costs were not fully passed through to customers in corrugated solutions. He reported that European box demand was up about 2% in 2025, and that the European box market has grown about 7% since 2019—implying a compound annual growth rate slightly above 1%, below historic growth closer to 2% per year. Over the same period, he said containerboard capacity increased about 15%, contributing to industry oversupply.
In uncoated fine paper, King said prices came under “significant pressure” as capacity reductions across the industry were insufficient to offset weak demand, and lower pulp prices provided relief to higher-cost, unintegrated producers. Mondi’s South African business, described as a net seller of pulp, was also impacted by an unusually strong rand, which reduced export pulp realizations in local currency terms. King said pulp prices had shown a modest pickup recently, and the company was implementing price increases in certain uncoated fine paper grades in Europe, citing stronger order books and cost support.
In flexible packaging, King pointed to strong volume growth in the global paper bags business, with contributions across key markets and increasing demand for e-commerce solutions in Europe and the U.S. He said consumer flexibles and functional paper and film segments showed defensive qualities through product mix improvements and innovation tied to sustainable packaging. Kraft paper volumes were “moderately down” year-over-year as Mondi took production downtime amid softer demand, particularly in the second half.
King said sack kraft prices came under pressure in the second half of 2025 and into early 2026, but indicated improving order intake for key sack kraft grades and said Mondi is implementing price increases to reverse late-2025 and early-2026 declines. He framed flexible packaging margin pressure as more cyclical and demand-driven than corrugated, citing European industrial bag demand down about 7% from 2019, while European sack kraft capacity remained relatively flat. He also said European industrial bag demand improved off 2023 lows, rising about 2% in 2024 and 2.5% in 2025, and that Mondi’s bags business grew 5%.
Looking ahead, management stressed readiness to benefit from an upswing. Powell said deleveraging will depend both on net debt management and EBITDA, noting that price improvements would accelerate leverage reduction, while emphasizing Mondi is taking actions “not waiting for the markets to move.”
About Mondi (LON:MNDI)
Mondi plc, together with its subsidiaries, engages in the manufacture and sale of packaging and paper solutions in Africa, Western Europe, Emerging Europe, North America, South America, Asia, Australia, and internationally. The company operates in three segments: Corrugated Packaging, Flexible Packaging, and Uncoated Fine Paper. The Corrugated Packaging segment provides virgin and recycled containerboards for fresh fruit packaging and heavy and fragile goods transport packaging applications; and corrugated solutions, such as corrugated boxes and packaging products.
