Mondi Shares Plunge: Q3 Profit Impacted by Challenging Market Conditions

Mondi plc (LON: MNDI), a global packaging and paper company, saw its share price plunge over 17% on Monday after the company said it experienced a challenging third quarter.

The company reported an underlying EBITDA of €223 million for the third quarter of 2025, including a €20 million forestry fair value gain. The figure reflects a challenging trading environment characterized by subdued demand and declining paper selling prices.

The Q3 2025 underlying EBITDA was lower than the €274 million reported in Q2 2025. This decrease was attributed to lower sales volumes and the impact of planned maintenance shutdowns in upstream pulp and paper businesses.

Selling prices also declined, reversing gains made in the first half of the year. The packaging converting businesses demonstrated stable performance compared to the previous quarter, while Uncoated Fine Paper experienced a significant impact from weak demand, intense competition, maintenance shutdowns, and declining selling prices.

Mondi anticipates continued challenging trading conditions for the remainder of the year. Fragile demand-side confidence, oversupply in key markets, and lower current selling prices compared to the third quarter average are expected to persist.

The company said it is actively working to optimize its competitive advantage. The company is focused on operational efficiency, cost control, and cash generation to mitigate the impact of softer markets and ensure it is well-positioned for future growth.

Effective October 1, 2025, Mondi reorganized its business units into Corrugated Packaging and Flexible Packaging. Uncoated Fine Paper has been combined with Corrugated Packaging to create an enlarged Corrugated Packaging Business Unit. This reorganization aims to streamline operations, facilitate faster decision-making, reduce costs, and deliver operational synergies across pulp and paper mills.

After a period of investment, Mondi is focusing on achieving full productivity ramp-up, executing its commercial strategy, driving cash generation, and delivering returns. The net incremental contribution to EBITDA in FY2025 from these projects is now expected to be around €30 million.

The company has decided to delay the investment in a new sack kraft paper machine at its pulp mill in Hinton, Canada, due to the current market environment, while retaining the option to proceed when conditions improve. Current capital expenditure is focused on stay-in-business investments and cost optimization opportunities.

CEO Andrew King commented that trading conditions in the third quarter were challenging, with softer volumes and declining prices across most pulp and paper grades.

King further stated, “Across the Group, we remain relentlessly focused on managing the controllables. We have sharpened our emphasis on margin management, rigorous cost optimisation and continuous improvement. These initiatives enable us to navigate current headwinds, build a stronger, more efficient operating platform and drive free cash flow.”

Despite the current headwinds, Mondi remains confident in the long-term sustainable growth fundamentals of its packaging businesses, suggesting a potential buying opportunity for long-term investors willing to weather the cyclical downturn.