Half-yearly results for the six months ended 30 June August 2018

Transcription

1 Half-yearly results for the six months ended 30 June August 2018

2 Mondi: Forward-looking statements disclaimer This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi s financial position, business strategy, market growth and developments, expectations of growth and profitability and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as believe, expects, may, will, could, should, shall, risk, intends, estimates, aims, plans, predicts, continues, assumes, positioned or anticipates or the negative thereof, other variations thereon or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements and other statements contained in this document regarding matters that are not historical facts involve predictions and are based on numerous assumptions regarding Mondi s present and future business strategies and the environment in which Mondi will operate in the future. These forward-looking statements speak only as of the date on which they are made. No assurance can be given that such future results will be achieved; various factors could cause actual future results, performance or events to differ materially from those described in these statements. Such factors include in particular but without any limitation: (1) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development plans and targets, changes in the degree of protection created by Mondi s patents and other intellectual property rights and the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for Mondi s products and raw materials and the pricing pressures thereto, financial condition of the customers, suppliers and the competitors of Mondi and potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in Mondi s principal geographical markets or fluctuations of exchange rates and interest rates. Mondi expressly disclaims a) any warranty or liability as to accuracy or completeness of the information provided herein; and b) any obligation or undertaking to review or confirm analysts expectations or estimates or to update any forward-looking statements to reflect any change in Mondi s expectations or any events that occur or circumstances that arise after the date of making any forward-looking statements, unless required to do so by applicable law or any regulatory body applicable to Mondi, including the JSE Limited and the LSE. 2

3 Highlights Financial overview Market and operational review Key strategic developments Outlook Appendices 3

4 Highlights Underlying EBITDA and ROCE million Strong financial performance 18.5% 19.3% 21.3% 22.0% 20.0% Underlying EBITDA of 852 million, up 17%, margin of 22.9% Profit before tax of 490 million, up 6% 18.0% 16.0% Basic underlying earnings of 89.2 euro cents per share, up 26% 14.0% % Cash generated from operations up 18% H H H ROCE (%) Basic underlying earnings per share euro cents per share 10.0% + Return on capital employed 21.3% Excellent performance from Packaging Paper Good progress on major capital investment projects Integration of recent acquisitions on track, expanding the Group s containerboard portfolio and network of industrial bag plants in high growth regions H H H Interim dividend declared of euro cents per share Strong financial performance The Group early adopted the new 'Leases' accounting standard, IFRS 16. All 2017 comparative figures in this presentation have been restated where applicable. 4

5 Highlights Financial overview Market and operational review Key strategic developments Outlook Appendices 5

6 Operating financial highlights million H H H % change vs H % change vs H Group revenue 3,582 3,514 3,727 4% 6% Underlying EBITDA % 13% % Margin 20.4% 21.4% 22.9% Underlying operating profit % 20% % Margin 14.0% 15.0% 16.9% Group ROCE 18.5% 19.3% 21.3% Strong performance on all key metrics 6

7 Underlying EBITDA development Underlying EBITDA development million 338 (123) (28) (50) (7) (8) H Sales volumes Sales prices Variable costs Cash fixed costs Currency effects Fair value gain on forestry assets Other H Higher average selling prices more than offsetting higher costs and negative currency effects 7

8 Business unit contribution Business unit underlying EBITDA development million H underlying EBITDA contribution by business unit¹ % (6) (10) 5 (28) Packaging Paper 26% % Fibre Packaging Consumer Packaging % 12% Uncoated Fine Paper H Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper Corporate H Fibre packaging value chain Fibre packaging value chain main contributor to EBITDA growth 1 Breakdown excludes corporate costs 8

9 Financial review million H H H % change vs H % change vs H Underlying EBITDA % 13% Depreciation, amortisation and impairments (227) (226) (222) 2% 2% Underlying operating profit % 20% Net finance costs (47) (38) (40) 15% (5%) Net profit from equity accounted investees 1 Underlying profit before tax % 21% Underlying tax charge (87) (94) (132) (52%) (40%) Non-controlling interests (25) (18) (26) (4%) (44%) Underlying earnings % 15% Special items (after tax and non-controlling interests) 5 (58) (81) Profit after tax and non-controlling interests % 10% Basic earnings per share (euro cents) % 10% Basic underlying earnings per share (euro cents) % 15% 9

10 Net debt and interest million H H H Net debt 1,679 1,532 2,450 Average net debt 1,564 1,596 1,708 Net interest expense 2 (before capitalised interest) Effective interest rate 5.5% 4.0% 4.3% Committed facilities 2,005 1,987 2,532 Of which undrawn Net debt/12-month trailing underlying EBITDA (times) Net debt was up due to: payment of the 2017 special dividend ( 484 million) completion of acquisitions ( 415 million 1 ) Lower finance costs driven by a lower effective interest rate In April 2018, issued a 1.625% 600 million Eurobond with an 8-year tenor extending the Group s maturity profile and maintaining our strong liquidity Public credit ratings Standard & Poor s upgraded to BBB+ (stable outlook) Moody s Investors Service maintained at Baa1 (stable outlook) Maintaining a robust financial position 1 On a debt and cash-free basis 2 Interest expense on bank overdrafts, loans and lease liabilities net of investment income 10

11 Cash flow effects movement in net debt Movement in net debt million 484 2, ,532 (870) , Net debt at 31 December 2017 Cash generated from operations (excluding working capital) Movement in working capital Capital expenditure and investment in forestry assets Tax and interest paid and other Ordinary dividends paid 1 Net debt before acquisitions and special dividend Acquisitions 2 Special dividend paid Net debt at 30 June 2018 Investment in the business and distribution to shareholders 1 To shareholders and non-controlling interests 2 Excludes 1 million of deferred acquisition consideration 11

12 Continued growth in shareholder returns Dividends declared euro cents per share Total ordinary dividend CAGR: 15% ¹ 2018 Interim dividend of euro cents per share declared Interim dividend Final dividend 1 Excludes 2017 special dividend of 100 euro cents per share which was distributed in addition to the ordinary dividend 12

13 Reorganisation of business units Effective from 1 August 2018, the Group reorganised its business units to achieve improved strategic alignment and operational coordination across the fibre based packaging value chain The changes to the Group s business units, and consequently to the Group s segmental reporting, are as follows: Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging No changes to the Consumer Packaging or Uncoated Fine Paper business units The reorganisation has no impact on the overall Group result The Group s restated segmental reporting is disclosed in the half-yearly results announcement 13

14 Highlights Financial overview Market and operational review Key strategic developments Outlook Appendices 14

15 Packaging Paper Underlying EBITDA, margin and ROCE million Strong performance underlying EBITDA up 43% Driven by: 32.8% higher selling prices 26.4% 29.4% 25.6% 31.3% higher sales volumes mix improvements 22.8% cost reduction programmes + Partly offset by: higher costs, with the exception of paper for recycling H H H ROCE Underlying EBITDA margin negative currency effects Decision taken to stop production of in-line silicone coated products at Štětí production of speciality kraft paper to continue, with off-line coating at our release liner operations Completed sale of flat sack kraft paper mill in Pine Bluff, Arkansas (130ktpa capacity) Powerflute acquisition completed Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper 15

16 Packaging Paper industry fundamentals Selling prices /tonne Containerboard Markets remain robust: good demand and limited capacity additions continue to support pricing Higher average selling prices following increases implemented during 2017 and Q Further price increases of 40/tonne announced for selected virgin containerboard grades in Europe from September / / / / / /2018 Unbleached kraftliner Recycled containerboard White top kraftliner Source: FOEX Indexes Ltd Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper 16

17 Packaging Paper industry fundamentals Selling prices Prices indexed to June / / / / / /2018 Unbleached sack kraft paper - Europe + Sack kraft paper Implemented sack kraft paper price increases (8% to 9% on 2017 average) from January 2018 Markets remain very tight good demand, particularly in our export markets constrained supply Further price increases of 5% to 7% implemented in Europe by the end of Q2 (most volumes integrated) Speciality kraft paper Good demand Higher average selling prices on H1 and H Drive to replace plastic carrier bags with paper based alternatives Source: Mondi Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper 17

18 Fibre Packaging Underlying EBITDA, margin and ROCE million 13.0% 9.8% 11.2% 11.2% 9.1% 9.8% H H H ROCE 1 For EGP510 million ( 25 million) on a debt and cash-free basis Underlying EBITDA margin + Corrugated Packaging Implemented price increases to compensate: o higher paper input costs o negative currency effects Continues to benefit from growing e-commerce activity Stable sales volumes on strong comparable prior year Focus on continuous improvement to reduce conversion costs and further enhance product offering, quality and service Industrial Bags Volume growth of 3.6% compared to H annual contracts price increases largely reflect the full cost impact of paper price increases Good cost management and benefit from restructuring measures Acquired Egyptian industrial bags plant in June and agreed to acquire a control position in another plant near Cairo Working closely with Consumer Packaging to develop paper based packaging solutions Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper 18

19 Consumer Packaging Underlying EBITDA, margin and ROCE million Steady underlying performance offset by negative currency and one-off effects Benefiting from: 14.0% good growth in selected value-added segments in technical films and consumer goods packaging 13.0% 9.8% 12.5% 10.4% 10.4% + programme launched in the second half of 2017 to restructure the cost base Short-term performance held back by declining volumes in personal care components and certain weaker plants in the portfolio H H H ROCE Underlying EBITDA margin Progressing with restructuring our UK operations, including the closure of our plant in Scunthorpe New business opportunities for flexible packaging typically uses 70% less plastic than rigid based alternatives Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper 19

20 Uncoated Fine Paper Underlying EBITDA, margin and ROCE million 27.1% 26.6% 26.5% 25.3% 25.3% 24.4% H H H ROCE Underlying EBITDA margin + Strong performance Underlying EBITDA of 230 million ROCE of 26.5% Higher average selling prices offset by: higher costs extended shut at Richards Bay lower fair value gain on forestry assets negative currency effects Ceasing production at one of our uncoated fine paper machines at Merebank during H (70ktpa capacity) Acquired around 11,000 hectares of well-located forest plantations in KwaZulu-Natal (South Africa) 1 1 For ZAR408 million ( 27 million) on a debt and cash-free basis Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper 20

21 Uncoated Fine Paper industry fundamentals Pulp and A4 B-copy prices /tonne / / / / / /2018 A4 B-copy Pulp (BHKP) + Uncoated Fine Paper Higher European prices following the implementation of price increases during 2017 and at the end of March 2018 Mondi s uncoated fine paper sales volumes higher in H on prior year despite ongoing structural demand decline in mature markets continue to benefit from: superior cost positioning emerging market exposure Implemented further price increases in July of 2% to 6% for our range of uncoated fine papers in Europe with a further price increase of up to 6% announced for implementation in September Source: FOEX Indexes Ltd Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper 21

22 Highlights Financial overview Market and operational review Key strategic developments Outlook Appendices 22

23 Key strategic developments Acquisitions totalling 415 million 1 completed in H1 2018: Growing through acquisitions o o o Powerflute (Finland): 363 million NPP (Egypt): 25 million Forest plantations (South Africa): 27 million Progress made on major capital expenditure projects Štětí kraft paper mill modernisation project on track to start-up towards the end of the year Ružomberok kraft top white machine (300 ktpa) expected start-up in 2020 (subject to permitting), pulp mill upgrade ongoing Sustainable packaging Seeking opportunities to leverage customer relationships and product know-how uniquely positioned as a leading producer of both plastics and paper based solutions Joined the Ellen MacArthur Foundation New Plastics Economy Initiative actively working with stakeholders to find innovative solutions that improve the sustainability of packaging Leveraging key industry trends sustainability, e-commerce and convenience 1 On a debt and cash-free basis 23

24 Finding solutions with our customers BarrierPack recyclable shoppingworld by Mondi Point-of-sale: Baca Stand Fully recyclable new plastic laminate, recipient of the Best Technology Innovation in Plastics Recycling award 1 Sustainable packaging solution, with quality and functionality performance properties equivalent to conventional materials Supports circular economy principles Plastics Recycling Europe Awards Leading European speciality kraft paper producer offering a broad range of paper grades for bags and shoppers 1 st European shopping bag summit organised by Mondi in April 2018 White or brown, for food or fashion, entirely virgin-based or with recycled fibres, highly functional or strikingly attractive Outstanding quality paper grades to enhance brand awareness and positive consumer shopping experience Awarded with a World Star award An easy forming, tape-free corrugated display solution consisting of modular trays with a mid-support structure Enabling simple and fast filling during production as well as easy access for end-consumers Scores in terms of efficiency as it uses 46% less material and requires 20% less handling time per pallet compared to conventional stack boxes 24

25 Highlights Financial overview Market and operational review Key strategic developments Outlook Appendices 25

26 Outlook The trading environment remains positive going into the second half of the year, with pricing in key fibre based product segments remaining supportive. The second half of the year will be impacted by the usual seasonal downturn in Uncoated Fine Paper. We also expect continued pressure on the cost base across the Group, mitigated by our ongoing proactive and comprehensive cost reduction programmes. Mondi is uniquely positioned to develop sustainable fibre and plastic based packaging solutions. With our robust business model, focus on leveraging key industry trends of sustainability, e-commerce and convenience, and culture of driving performance, we remain confident of sustaining our track record of delivering value accretive growth. 26

27 Summary

28 Q&A

29 Highlights Financial overview Market and operational review Key strategic developments Outlook Appendices 29

30 Mondi at a glance Fibre Packaging 2 Consumer Packaging Uncoated Fine Paper 3,735m 1,646m 1,832m 2017 revenue 1 & underlying EBITDA margin 25% 52% 23% 22.3% 13.5% 25.3% Products 1 Segment revenues, before elimination of inter-segment revenues 2 Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging effective from 1 August

31 Leading market positions Kraft paper Global Virgin containerboard Europe Emerging Europe South Africa Uncoated fine paper Containerboard Uncoated fine paper #1 Industrial bags Commercial release liner Consumer flexible packaging Corrugated packaging #3 Please see sources and definitions at the end of this document 31

32 Strong global presence Revenue by location of customer % Revenue by location of production % 13% 23% 8% 7% 1% 10% 35% 6% + 13% 9% 39% 36% Group revenue: 3,727 million Group revenue: 3,727 million Emerging Europe Western Europe Russia South Africa North America Other 32

33 Technical guidance 2018 guidance Capital expenditure range in 2018 and 2019 (per annum) Depreciation and amortisation Estimated impact of maintenance shuts million million ± 115 million Working capital as a % of turnover 12 14% Effective tax rate ±22% 33

34 Our cash flow priorities remain unchanged Maintain our strong and stable financial position and investment grade credit metrics Free cash flow priorities Grow through selective capital investment opportunities Support payment of dividends to our shareholders As appropriate Evaluate growth opportunities through M&A and/or increased shareholder distributions 34

35 Creating sustainable value through our strategic framework 35

36 Our cost advantaged operations Mondi capacity by quartile of relevant industry cost curve1, 2, 3 % 2 nd quartile: 26% 1 st quartile: 53% Around 80% in the 1 st or 2 nd cost quartile 1 Includes unbleached kraftliner, white top kraftliner, nordic and semi chemical fluting, testliner, recycled fluting, unbleached sack kraft paper, bleached sack kraft paper, uncoated fine paper (including value added grades) and BHKP 2 Based on delivered cost to Frankfurt except BHKP (delivered to Rotterdam), uncoated fine paper Merebank (delivered to South Africa) and recycled containerboard Tire (delivered to Turkey) 3 European capacity except white top kraftliner, bleached & unbleached sack kraft paper and BHKP (global capacity) and uncoated fine paper Merebank (South Africa only) Source: RISI and Mondi estimates, Q BHKP ZAR/EUR FX rate adjusted to closing rate (at 30 June 2018) of

37 Acquisitions completed during H Powerflute Acquired for a total consideration of 363 million on a debt and cash-free basis (completed June 2018) Integrated pulp and paper mill in Kuopio (Finland) with an annual production capacity of 285,000 tonnes of high-performance semi-chemical fluting Production sold to a diverse range of customers, primarily for packaging fresh fruit and vegetables, but also other end-uses such as electronics, chemicals and pharmaceuticals Around half of the company s production is sold in Europe, while the remainder is exported globally Egyptian industrial bags plants Acquired NPP in June 2018, an industrial bags producer, operating one plant in Giza near Cairo (Egypt) for a total consideration of 25 million (EGP510 million) on a debt and cash-free basis Acquisition further expands our production network in the fast growing Middle East region Mondi signed an agreement to acquire a control position in another plant near Cairo in December 2017, completion expected in Q

38 Continued investment in our world class asset base Capital expenditure million % 164% 124% 138% 158% ¹ 2019 Capex and investment in intangible assets as a % of depreciation, amortisation and impairments 175% 155% 135% 115% 95% 75% 55% 35% 15% -5% + Good contributions from recently completed capital projects Ongoing progress made on our major capital expenditure programme, totalling over 750 million and securing future growth Key projects expected to increase the Group s current saleable pulp and paper production by around 9% when in full operation 770 million Over 750 million committed to major capital projects approved major capital expenditure projects ( ) (2017+) million and 158% relate to H

39 Ongoing major capital investment projects Ružomberok mill, Slovakia Štětí mill, Czech Republic 300,000 tonne per annum kraft top white machine Debottlenecking pulp mill increasing capacity by 100,000 tonnes per annum (to be mostly integrated into containerboard) Incentives received Pulp mill upgrade in progress, start-up expected in late 2019 Paper mill expected start-up in 2020 (subject to permitting) Replacement of recovery boiler, rebuild of fibre lines and debottlenecking of paper machines Benefits: o increased saleable production 90,000 tonnes per annum market pulp and 55,000 tonnes per annum packaging paper o reduced environmental footprint, increased electricity self-sufficiency, lower production costs In progress, expected start-up in late

40 Strong track record of acquisitions Ṥwiecie minorities (Containerboard) Fibre Packaging Consumer Packaging Nordenia (Consumer Packaging) KSP (Consumer Packaging) 2 Duropack plants (Corrugated) Intercell (Industrial Bags) Ascania (Consumer Packaging) Uralplastic (Consumer Packaging) Excelsior Technologies (Consumer Packaging) 2018 Powerflute (Containerboard) Graphic Packaging plants (Industrial Bags) Kalenobel (Consumer Packaging) SIMET (Corrugated) Lebedyan (Corrugated) NPP (Industrial Bags) 2.0 billion invested in acquisitions since

41 Pulp and paper integrated value chain (pro-forma 2017) 1 Net exposure 1.7 mt Mondi managed forests AAC: 8 million m 3 Virgin containerboard 2.0 mt Consumption mt Paper for recycling 1.3 mt Net exposure balanced Internally procured wood 2 Recycled containerboard 0.6 mt Consumption mt 4 million m 3 Externally procured wood Pulp mill 4.5 mt Paper mill mt Kraft paper 1.1 mt Net exposure 0.3 mt Consumption mt 13 million m 3 Uncoated fine paper 4 External sales 1.6 mt 1.6 mt Net exposure 0.2 mt 1 Adjusted for the acquisition of Powerflute (0.3mtpa of virgin containerboard) and the disposal of Pine Bluff (0.1mtpa of kraft paper) 2 Due to commercial, logistic and sustainability considerations, the actual wood procured from our managed forests was lower than the annual allowable cut ( AAC ) 3 Total consumption (aggregate of internal and externally procured packaging paper) 4 In addition to the 1.6mt of uncoated fine paper, the Group also produced 0.3mt of newsprint in

42 With an integrated approach to sustainable development Looking ahead to 2020: 16 commitments across 10 action areas Solutions that create value for our customers Encourage sustainable, responsibly produced products Relationships with communities Enhance social value to our communities through effective stakeholder engagement and meaningful social investments Supplier conduct and responsible procurement Encourage supply chain transparency and promote fair working conditions together with our key suppliers Biodiversity and ecosystems Promote ecosystem stewardship in the landscapes where we operate through continued multistakeholder collaboration Constrained resources and environmental impacts By 2020, reduce against 2015: specific contact water consumption (5%) 1 specific waste to landfill (7.5%) specific NOx emissions (7.5%) 1 specific effluent load (COD) (5%) 1 From our pulp and paper mills Our Growing Responsibly model Employee and contractor safety Avoid work-related fatalities Prevent life-altering injuries Reduce TRCR by 5% against 2015 A skilled and committed workforce Engage with our people to create a better workplace Fairness and diversity in the workplace Promote fair working conditions in the workplace Sustainable fibre Maintain 100% FSC certification of our forests and promote sustainable forest management Procure a minimum of 70% of wood from FSC or PEFC certified sources with the balance meeting our company minimum wood standard Climate change By 2030, reduce specific CO 2 e emissions by 15% against 2014¹ 42

43 Input costs Variable costs million 2,000 1,500 1, H H H Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs 43

44 24.0% 22.0% 20.0% 18.0% 16.0% 14.0% Fixed costs Fixed costs composition (excluding special items) million 1,200 1, % 22.9% 22.6% H H H Depreciation, amortisation and impairments Personnel costs Fixed costs excluding depreciation, amortisation and impairments as a % of revenue Other net operating expenses Maintenance and other indirect expenses 44

45 Net special item charge in H million pre-tax Packaging Paper ( 55 million) Discontinuation of in-line silicone coating production at Štětí. Restructuring costs of 8 million and related impairment of assets of 47 million were recognised Consumer Packaging ( 27 million) Restructuring of operations, primarily in the United Kingdom. Restructuring costs of 9 million and impairment of assets of 15 million were recognised Following the discontinuation of in-line silicone coating production at Štětí, restructuring costs of 3 million and related impairment of 2 million, offset by reversal of impairment of assets of 2 million, were recognised Uncoated Fine Paper ( 18 million) Closure of an uncoated fine paper machine at Merebank. Restructuring costs of 13 million and related impairment of assets of 5 million were recognised 45

46 Taxation and working capital Taxation Taxation million H H H % change vs H % change vs H Effective tax rate of 22%, above the comparable prior year period and in line with our expectation Underlying tax charge (52%) (40%) Income tax paid (51%) (41%) Effective tax rate 19% 19% 22% + Increase partly due to the full utilisation in 2017 of key tax incentives in Poland. In addition, in the prior year we recognised deferred tax assets related to previously unrecognised tax losses Working capital management million 13.4% 12.7% 14.3% Working capital Net cash outflow of 148 million (H1 2017: 141 million) ,065 H H H Working capital Working capital as a % of revenue Higher than December 2017 reflecting the usual seasonal uptick in the first half of the year compounded by increasing average selling prices 46

47 Cash flow (reconciling to movement in net debt) million H H H % change vs H % change vs H Underlying EBITDA % 13% Working capital movements (141) 19 (148) Other operating cash flow items 23 (20) 18 Cash generated from operations % (4%) Income tax paid (73) (78) (110) (51%) (41%) Dividends received from other investments 1 Net cash generated from operating activities % (9%) Capital expenditure (254) (357) (347) (37%) 3% Investment in forestry assets (25) (24) (28) (12%) (17%) Acquisitions 1,2 (43) (5) (414) Interest paid (59) (38) (32) 46% 16% Dividends paid to shareholders (180) (93) (691) Dividends paid to non-controlling interests (21) (1) (17) Other investing and financing activities (41) (9) (1) Net (increase)/decrease in net debt (84) 147 (918) 1 On a debt and cash-free basis 2 H excludes 1 million of deferred acquisition consideration 47

48 Statement of financial position million 30 June December June 2018 Property, plant and equipment 3,994 4,128 4,187 Goodwill Working capital ,065 Other assets Other liabilities (693) (715) (724) Net assets excluding net debt 5,473 5,539 5,966 Equity 3,490 3,683 3,188 Non-controlling interests in equity Net debt 1,679 1,532 2,450 Capital employed 5,473 5,539 5,966 48

49 Production volumes Packaging Paper H H H % change vs H % change vs H Containerboard '000 tonnes 1,119 1,178 1,189 6% 1% Kraft paper '000 tonnes % Softwood pulp '000 tonnes 1,005 1,005 1,028 2% 2% Hardwood pulp '000 tonnes % (2%) Fibre Packaging Corrugated board and boxes million m (1%) (2%) Industrial bags million units 2,513 2,439 2,600 3% 7% Extrusion coatings million m % Consumer Packaging million m 2 3,783 3,654 3,819 1% 5% Uncoated Fine Paper Uncoated fine paper '000 tonnes % 2% Softwood pulp '000 tonnes (12%) (2%) Hardwood pulp '000 tonnes (13%) (12%) Newsprint '000 tonnes (36%) (14%) 49

50 Exchange rates Closing rates against the euro H H H % change 1 vs H % change 1 vs H South African rand (8%) (8%) Czech koruna % (2%) Polish zloty (3%) (5%) Pounds sterling (1%) Russian rouble (8%) (5%) Turkish lira (33%) (17%) US dollar (3%) 3% Average rates for the period against the euro South African rand (4%) 6% Czech koruna % 1% Polish zloty % Pounds sterling (2%) 1% Russian rouble (15%) (4%) Turkish lira (26%) (15%) US dollar (12%) (3%) 1 (Weaker/devaluation of currency against euro) / Stronger currency against euro 50

51 Market position sources and definitions Mondi region definitions Europe Europe including Russia and Turkey Emerging Europe Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey, Ukraine North America Canada, Mexico, USA Sources for market position estimates Virgin containerboard (Europe) and Containerboard (emerging Europe) based on capacity (including kraft top liner) Source: RISI European Paper Packaging Capacity Report and Mondi estimates Kraft paper (Global) based on capacity Source: RISI European Paper Packaging Capacity Report, RISI Mill Asset Database, Pöyry Smart Terminal Service and Mondi estimates Corrugated packaging (emerging Europe) based on production Source: Henry Poole Consulting and Mondi estimates Industrial bags (Global) based on sales volume Source: Eurosac, Freedonia World Industrial Bags 2016 study and Mondi estimates Consumer flexible packaging (Europe) based on sales Source: PCI Wood Mackenzie Flexible Packaging, European Supply/Demand report, 2017 Commercial release liner (Europe) based on sales volumes Source: AWA European Release Liner Market Study and Mondi estimates Uncoated Fine Paper (Europe) based on sales volumes (Ilim JV considered separate from IP) Source: Euro-Graph delivery statistics, EMGE Woodfree Forecast, EMGE World Graphic Papers, RISI Mill Asset Database, Eastconsult and Mondi estimates Uncoated Fine Paper (South Africa) based on Mondi estimates 51

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