Mondi Group has provided an update regarding the impact COVID-19 has had on the business, trading for the period since 31 December 2019 and logistics relating to its AGM.
During these uncertain times, the safety and welfare of the Group’s employees and our communities remain our top priority. We also have a responsibility to continue providing essential materials and products to our customers, many of whom produce food and hygiene products, as well as contributing to local services such as energy and waste water treatment in our larger operations. Our businesses have generally been designated as providing essential services by governments in the countries in which we operate, allowing the Group to play an important role in responding to the COVID-19 pandemic.
The Group delivered a robust performance, in line with expectations, during the first quarter of 2020. Underlying EBITDA of €385 million was 18% below the comparable prior year period (€471 million), driven mainly by lower pricing across our key paper grades mitigated by lower input cost and our ongoing cost reduction programmes. Underlying EBITDA was in line with the fourth quarter of 2019 (€381 million).
We have postponed non-essential capital expenditure and slowed down some of our major capital projects, thereby both reducing near term cash outflows and minimising contractors and other non-operating people on our key sites. As a result, we now expect capital expenditure of around €600 million (previously €700-800 million) in 2020.
Mondi has a strong balance sheet, sector leading investment grade credit ratings, good relationships with a broad group of banks, and has recently demonstrated its access to the public bond markets with the successful launch of a €750 million 8-year Eurobond.
As at 31 December 2019, the net debt to underlying EBITDA ratio was 1.3 times, well below our single bank debt covenant of 3.5x net debt to underlying EBITDA (excluding the impact of IFRS16 adjustments).
Commenting on the announcement, Andrew King, Group CEO, said, “Mondi is a resilient business offering packaging and other products for daily consumer needs, and delivering essential services to the communities around its larger operations. We delivered a robust performance in the first quarter and in this regard my thanks go to all our colleagues for their courage and commitment during these challenging times. The Group is financially strong with a robust liquidity position and capital structure. However, in these unprecedented times we are taking appropriate actions to ensure we remain well-placed to withstand an extended period of uncertainty.”
