Mondi (LON:MNDI) reported underlying EBITDA of €379 million for the first half of 2026, as lower average selling prices and higher input costs outweighed improved sales volumes and cost-control measures. The company said it entered the second half with higher packaging prices and strong order books, though it continues to face volatile energy-related costs and rising wood costs in Central and Eastern Europe.
Group CEO Andrew King said the company partially mitigated margin pressure through higher volumes, proactive pricing actions and tight cost control. Cash generated from operations totaled €347 million during the period, supported by working-capital management and lower capital expenditure, while net debt remained unchanged at €2.6 billion at June 30.
Pricing and cost pressures
Input costs increased due to higher wood costs in Central and Eastern Europe, as well as energy and other inflation tied to the conflict in the Middle East. Powell said Central and Eastern European wood costs are expected to create a headwind of about €30 million to €35 million in the second half compared with the first half. He added that energy costs remain volatile and could represent a €0 million to €30 million second-half headwind, depending on market conditions.
Powell said wood costs have risen as reduced furniture demand and lower European wood exports into the Middle East have led to less sawmill activity and lower supplies of wood chips. He also noted that the region has limited availability of calamity wood compared with Scandinavian markets.
The company recorded a €35 million forestry fair-value loss, compared with an €18 million gain in the prior-year period. The loss was mainly related to lower local wood prices in South Africa. Powell said that, absent significant changes in the market environment, Mondi would expect a fair-value gain in the second half.
Cash, capital spending and special charges
Mondi reduced its expected full-year capital expenditure to about €500 million from previous guidance of €550 million and from €690 million in 2025. Powell said the lower spending does not represent a deferral of essential maintenance or safety investments, but instead reflects discipline across a portfolio of smaller projects within a well-invested asset base.
The company said working capital at June 30 was €122 million lower than at the same point in 2025. While Mondi typically experiences a seasonal first-half working-capital outflow, Powell said the company expects a second-half inflow unless stronger trading momentum and higher prices increase the value of inventories and receivables.
Mondi refinanced its €1 billion revolving credit facility during the period and repaid the remaining balance of a Eurobond that matured in April. The company reported total liquidity of €1.15 billion, an investment-grade credit rating and no financial covenants. Its next notable debt maturity is a €750 million Eurobond due in April 2028.
The company recognized €320 million in pre-tax special-item charges, including a €296 million non-cash impairment and €24 million of cash restructuring and closure costs expected to be paid in the second half. The impairment included €206 million at the Duino mill in Italy, where Mondi said volumes are ramping in line with plan but expected returns have declined because of volatile energy costs and selling-price assumptions.
The remaining €90 million of impairment charges related to the Mondi Neusiedler uncoated fine-paper operations in Austria, the Schwarzenberg solid-board mill in Germany, and the Stambolijski mill in Bulgaria, which ceased operations in 2024.
Packaging volumes and market conditions
In Corrugated Packaging, containerboard volumes rose about 12%, supported by the Duino and Kuopio mill expansion projects. Like-for-like box volumes increased 2%, with growth in Poland and surrounding emerging European markets and a recovery in Turkey. Germany and Benelux remained weak, King said.
Uncoated fine-paper volumes were stable despite an estimated 3% decline in European market demand, as Mondi said it gained share from weaker competitors. The company described recycled containerboard markets as oversupplied, while noting that virgin containerboard supply-demand conditions have tightened because there is little significant new European capacity and U.S. capacity reductions have reduced exports to Europe.
King said Mondi is currently discussing further containerboard price increases with customers. He said no additional kraft-paper increase was currently in the market, following increases implemented in the second quarter and early third quarter, but described kraft-paper order books as strong.
Flexible Packaging delivered a resilient performance, with converting operations offsetting pressure on kraft-paper margins. Kraft-paper demand was supported by export markets and e-commerce applications, while paper-bag sales grew in e-commerce applications in Europe and North America and industrial-bag demand was stronger in Central America.
Network optimization and growth priorities
Mondi announced six converting-plant closures over the past six months. Two sites have already closed and four are expected to close by year-end. King said the plants were profitable, with the goal being to transfer volumes to larger, more efficient operations, improve utilization and lower fixed costs. The program involves roughly 800 customers, relocation of 30 major pieces of equipment and a reduction of about 580 positions by year-end.
The company is also expanding its Mondi Management System across its mill and converting network, focusing on standardized processes, waste reduction, reliability and productivity. King said the Świecie mill in Poland achieved 4.3% productivity gains over the past 12 months, while output on selected machines increased 11%.
Looking ahead, King said trading momentum improved gradually through the first half and Mondi began the second half with higher packaging prices and “very good order books.” He cautioned, however, that energy costs, Central and Eastern European wood costs and geopolitical developments remain significant uncertainties.
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.
