Sustainable packaging and paper provider Mondi PLC's (LSE:MNDI) share price dropped by 5.4% in early trades on Thursday after the company issued a profit warning.
It said in a trading update that market demand remained “soft” in the third quarter, adding that it expects a 42% year-over-year reduction in underlying earnings for the quarter.
The company said it expects to generate earnings before interest, tax, depreciation and amortisation (EBITDA) of €261 million, down from €450 million a year earlier, which would make it the third quarter this year that it has posted lower earnings compared to last year.
It attributed the decline to a "much-reduced forestry gain" for its forestry products, citing lower average selling prices.
The forestry fair value gain, accounted for within uncoated fine paper, was €14 million for the third quarter, it said, significantly lower than the €72 million gain it recorded for the prior three months.
For the first nine months combined, the forestry fair value gain was €100 million, down from €169 million last year but up from a loss of €7 million in 2021.
Mondi’s chief executive officer Andrew King said: “Demand has remained subdued in the third quarter with stable pricing in containerboard but continued price declines in kraft paper.
“We expect this trend to continue through the final quarter of the year along with stabilising input costs and a greater impact from maintenance and project-related shuts.”
He added that a €1.2 billion expansion to its capital projects pipeline “remains on track and within budget”.