Mondi cuts future investment spending, maintains safety and asset integrity, Stays confident in long-term sustainable packaging growth

Mondi cuts future investment spending, maintains safety and asset integrity, Stays confident in long-term sustainable packaging growth

“Our performance reflects our cost advantaged and integrated assets, our quality product offering, the commitment of our people and the targeted strategic actions taken to enhance our competitive advantage,” said Andrew King, CEO, Mondi, while reviewing the Group’s business environment, operational strategy and future outlook in the annual report 2025.

The Pulp and Paper Times

According to Andrew King, fragile consumer and industrial confidence driven by macroeconomic uncertainty and geopolitical tensions continue to weigh on demand across many of Mondi’s core markets. These cyclical pressures have been further intensified by supply-side changes in capacity, particularly in recycled containerboard and pulp markets, where significant net capacity additions have been witnessed. In uncoated fine paper, industry responses to weaker market demand were considered inadequate. However, virgin containerboard and kraft paper markets — where Mondi holds strong leadership positions — have seen limited supply growth.

Despite these market pressures, Mondi remains confident in the long-term structural growth drivers for sustainable packaging. The company highlighted that continued growth in eCommerce and the transition toward circular packaging solutions, supported by customer preference and regulatory developments, continue to support future demand. The Group stated that customer engagement for developing scalable sustainable packaging solutions is increasing steadily.

Mondi emphasised its unique positioning through its ability to produce a broad range of corrugated and flexible packaging solutions. The company said its teams combine material expertise with operational and commercial excellence to deliver high-quality products. Mondi continues to support customers in transitioning toward recyclable, paper-based and high-performance alternatives without compromising product protection or operational efficiency.

The company highlighted its broad product offering ranging from virgin packaging for food safety compliance to ultra-strong industrial paper bags and eCommerce packaging solutions. It also underlined its innovation capabilities in advanced packaging solutions using paper, functional barriers and sealing technologies for FMCG and pet food packaging applications.

Mondi stated that its competitive advantage is supported by cost-advantaged pulp and paper mills located close to raw material sources, combined with an integrated converting network that enhances logistics and operational efficiency. The company said these factors enable it to deliver sustainable and innovative packaging products with strong reliability and cost competitiveness.

The Group confirmed that it will continue expanding sustainable packaging businesses across its two complementary business units by leveraging integrated assets and market leadership positions.

In Corrugated Packaging, Mondi said it remains focused on strengthening and optimising its presence in Europe and adjacent geographies by leveraging its upstream paper platform and enlarged converting network. The company also continues to optimise its uncoated fine paper assets while tightly managing costs and maintaining market leadership positions.

In Flexible Packaging, Mondi is pursuing segment-differentiated growth strategies. In industrial packaging, the company aims to continue growing globally as a leading supplier of sack kraft paper and industrial bags, supported by integration and scale advantages. In consumer applications, including speciality kraft paper, MailerBags and consumer flexible packaging, Mondi intends to leverage its capabilities in complex packaging solutions across multiple substrates, primarily in Europe and North America.

Mondi acknowledged the near-term market challenges and risks but stated that it has responded decisively through measures focused on strengthening earnings, cash flow and liquidity. The company believes these actions will strengthen short-term resilience while positioning the Group for stronger returns when market conditions improve.

Accelerating Operational Excellence Programmes

Operational excellence remains central to Mondi’s competitive strength and long-term sustainable growth strategy. The company said its focus is on eliminating productivity losses, improving operational efficiency and ensuring consistent, high-quality performance across the value chain.

As an example, Mondi reported that productivity across its paper bag converting plants improved by 5% in 2025 compared with 2024. The company is now accelerating new operational excellence programmes designed to build a zero-loss productivity mindset and implement disciplined operating systems.

According to Mondi, these programmes are helping optimise processes, lower costs, improve asset reliability, enhance right-first-time performance, reduce lead times and strengthen customer trust. The company added that these improvements are creating long-term structural advantages including faster innovation cycles, improved energy and resource efficiency and more flexible production systems.

One year into the multi-year programme, Mondi stated that strong momentum is already visible. A production line at one of its containerboard mills has already reduced unscheduled downtime and improved total efficiency by 3% above historical averages. The company expects further gains as this systematic approach is rolled out across additional production lines.

Plant Network Optimisation and Site Closures

Mondi stated that its continued focus on productivity improvement, cost competitiveness and network optimisation has resulted in the closure of 22 converting plants over the last ten years. The company follows a disciplined capital allocation strategy prioritising locations with stronger growth opportunities and customer demand.

During the last three months, Mondi announced the closure of three additional facilities — a corrugated solutions plant in Türkiye and paper bag plants in Hungary and Germany. The company said customer supply continuity will be maintained through alternative plants within its network that possess the required expertise and capacity.

Mondi also highlighted that the integration of Schumacher Packaging’s Western Europe Packaging Assets has strengthened its corrugated solutions network and created opportunities for further operational optimisation. The company now expects to achieve €32 million in cost synergies over three years following the acquisition, higher than the initially projected €22 million.

Strong Cash Generation and Disciplined Capital Allocation

The company intensified its focus on cash generation during 2025 and generated €1,072 million cash from operations compared with €970 million in 2024, driven by stronger working capital management.

Capital expenditure during the year stood at €673 million compared with €933 million in 2024, including spending on previously approved and completed major expansion projects. Mondi expects 2026 capital expenditure to decline to approximately €550 million, lower than the previously guided €650 million.

The planned investments will focus primarily on maintenance and targeted cost-optimisation projects including energy efficiency improvements, productivity enhancement and strengthening asset resilience. Mondi clarified that reduced capital expenditure will not compromise safety standards, asset integrity or its ability to benefit from future market recovery.

The Group also highlighted its strong financial position, noting that it has no financial covenants and maintains an investment-grade credit rating. Mondi refinanced its April 2026 bond maturity through a €550 million Eurobond issued in October 2025, with no further debt maturities expected until 2028.

Strong Positioning for Market Recovery

Mondi said it is proud of its teams for successfully completing major capacity expansion projects on time and within budget. The Group’s current focus is on ramping up productivity, executing commercial strategies, strengthening cash generation and delivering strong returns.

The company added that the integration of Schumacher Packaging and related cost synergies are progressing well. Going forward, Mondi aims to leverage its expanded geographic footprint and modernised asset base to drive profitable growth.

While acknowledging that the current cyclical downturn has lasted longer than previous downturns, Mondi expressed confidence in its ability to navigate the challenging environment through disciplined volume growth, margin management and cost optimisation.

The company reiterated its confidence in the structural growth drivers supporting its packaging businesses and stated that its innovative packaging and paper solutions, integrated value chain and disciplined capital allocation approach position the Group strongly for long-term value creation as market conditions improve.
 

Published at : Aug 12, 2026 10:04 AM (IST)

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