Mondi shares rally on resumption of dividend payments
MONDI’S share price leapt by more than 4 percent on the JSE yesterday after the global packaging and paper company resumed a dividend payment.
The dividend was put on hold last year to preserve cash due to uncertainty created by the Covid-19 outbreak.
However, yesterday the group declared a total dividend of 57.03 euro cents (R10.08) a share for 2019 and increased the dividend by 5.21 percent to 60 euro cents for the year to end December 2020.
The share price surged to a dayhigh of R382.83 a share after the release of the results, later closing the day at R373.90 on the JSE.
Chief executive Andrew King said Mondi delivered a robust performance in 2020 with a strong cash generation from operations of €1.49 billion.
“We were presented with uncertainties created by the Covid-19 outbreak in 2019 and we were not sure how the pandemic would play out in the long run. However, after delivering a robust performance, and given our strong financial position and confidence in the future of the business, the board has recommended a final 2020 dividend of 41 euro cents a share. The final dividend, together with the interim dividend, amounts to a total dividend for the year of 60 euro cents a share, an increase of 5 percent on the 2019 total dividend,” King said.
Its revenue declined by 8 percent to €6.66 billion, with strong volume growth in corrugated packaging and flexible packaging, but was offset by a combination of lower average selling prices and negative currency effects. Its underlying earnings before interest, tax, depreciation and amortisation (Ebitda) fell by 18 percent to €1.35bn, with an Ebitda margin of 20.3 percent.
Uncoated fine paper volumes were impacted by lower demand for professional and office printing as a result of the widespread lockdown measures.
The impact of planned maintenance shutdowns on underlying Ebitda in 2020 was around €100 million.
Mondi expects the maintenance shutdowns for 2021 on Ebitda to be around €140m. Its basic headline earnings per share fell by 28 percent to 123.9c.
The group has launched a Mondi Action Plan 2030, its sustainability roadmap for the next 10 years after delivering on its five-year 2020 commitments.
Looking ahead, King said although the near-term macroeconomic outlook continued to be uncertain, the company remained confident in the structural growth drivers in the packaging sectors in which they operated and the strength of their paper position.
“We are seeing strong order books supporting price increases in most packaging and pulp grades, and are encouraged by the improving uncoated fine paper demand.
“We are planning longer project-related maintenance shuts and are seeing input cost pressures and currency headwinds, although the benefits from our capital expenditure programme will continue to support our performance,” he said.