25 February 2021 by Steve Eminton

Mondi issues results amid reports of interest in DS Smith

Global packaging and paper group Mondi today announced its results alongside reports in the financial press that it was interested in acquiring DS Smith.

News service Bloomberg reported that Mondi had been “speaking with advisers” about a potential takeover. DS Smith shares soared in value this morning by 7% having also risen yesterday.

Recycled containerboard produced by Mondi’s mill in Poland

Both DS Smith and Mondi told letsrecycle.com that they did not comment on such reports.

Performance

A merger or acquisition of DS Smith would create a global giant and strengthen Mondi’s position in Europe and bring efficiencies to the businesses. One source told letsrecycle.com that in light of the “strength of performance” by DS Smith, interest in the company would not be unexpected.

Mondi is a supplier of paper to the UK market but has not mills in the UK. It has cardboard (OCC) mills in Sweden, Czech republic, Poland, Finland, Russia and Turkey as well as in South Africa.

DS Smith has its UK mill at Kemsley, Kent and has operations in Europe and the United States, and is a major recycler of cardboard and paper.

‘Robust’

In its results today, Mondi reported what it termed a “robust financial performance with excellent cash generation. Earnings before tax were €1,353 million, with a “margin of 20.3%”.

Andrew King, Mondi Group chief executive, said: “As a leading producer of both paper and flexible plastic-based packaging, we continue to support our customers’ environmental goals with packaging that is sustainable by design adhering to our principle of paper where possible, plastic when useful. Our capital investment programme to generate value accretive growth, enhance our cost competitiveness and deliver sustainability benefits is progressing well. In January 2021 we commissioned our investment in Štĕtí (Czech Republic), dedicated to producing speciality kraft paper for e-commerce and retail shopping bags.

“We continue to evaluate further opportunities for value accretive growth”

Andrew King, Mondi CEO

“We also started up a new 300,000 tonne kraft top white machine at Ružomberok (Slovakia) and we are moving forward with the previously announced major capital investment projects at Syktyvkar (Russia) and Richards Bay (South Africa). Expansionary projects are also underway at a number of our converting packaging operations, enhancing our production capabilities and product offering to further support our customers. We continue to evaluate further opportunities for value accretive growth and remain excited by the possibilities offered by our platform.”

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