Mondi plc

Welcome to the Mondi Full Year Results 2025. Just to let you know, we do have captions on today's call and these can be switched on and off within your Zoom settings, but please be aware they are automated and can sometimes contain errors. If you have a question today, then please use the raise hand function. I'm now going to hand you over to Andrew King. Andrew, please go ahead.

Good morning everyone and welcome to Mondi's 2025 full year results presentation. I'm Andrew King, your group CEO, and I'm joined this morning by our CFO, Mike Powell. As usual, I'll begin with some highlights for the year. Mike will then take you through the financial performance in more detail. I will then return to provide an update on our business units, discussing at the same time the current trading environment, and then take you through why we believe Mondi is strongly positioned to capture the upside as markets improve. After that, Mike and I look forward to taking your questions. So as you'll see on the first slide, in terms of our full year performance, I believe we did deliver a resilient outcome, €1 billion of underlying EBITDA, marginally down on the prior year. Pleasingly, cash generated from operations of €1.07 billion was up on the prior year. As Mike will explain in more detail, We were also able to reduce capex below previously guided levels, which further supported our cash flow and balance sheet. As I mentioned, this is a resilient performance in the context of what remain challenging market conditions and reflects both the strength of our integrated asset base, the value of our unique product offering and the impact of the self-help measures we have taken. While we remain confident in the structural drivers underpinning through-cycle growth in our sustainable packaging solutions, we're equally cognizant of the impact of the current downturn and the impact it's having on our near-term performance. In response, we have taken deliberate and decisive actions across the group, intensifying our focus on cost discipline, on operational excellence, on proactively optimizing our production footprint, and on cash generation, while at the same time continuing to focus on delivering a great value proposition to our customers. These actions, together with the significant competitive advantages we continue to enjoy as a business, Ensure that Mondi is strongly positioned to capture the upside as market conditions improve. With that, I'll hand you over to Mike for more colour on the 2025 financial performance.

Thanks, Andrew. Morning, everybody. Thank you for joining. On to our 2025 results, which demonstrate resilient performance against a backdrop of the prolonged cyclical downturn that our industry continues to face. Underlying EBITDA of a billion saw continued margin pressure associated with the challenging trading conditions, the makeup of which I'll come on to on the next slide. During the year we successfully completed the build and start-up phase of a number of major capacity expansion projects into our core markets. These investments, together with the Schumacher acquisition, position us strongly to capture the upside as market conditions improve. They have, however, led to a higher capital base, and as a result, you see an increase in depreciation and finance costs, which reduces the group's basic underlying EPS and return on capital in the year. And on the right-hand side, I'm pleased with the stronger cash generation from operations increasing to $1.72 billion through strong working capital management. So let me take you through the main movements in the underlying EBITDA when compared to the prior year of $1049 million that you can see on the left-hand side of the chart. As you can see, the performance was resilient in an environment of macroeconomic uncertainty and geopolitical tensions, with only small movements year on year, which is testament to the strength of the cost-advantaged and integrated assets, the quality product offering and the targeted actions taken. Sales volumes were up on the prior year, which included additional volumes from ramping up the new capacity. With respect to selling prices, this is mostly comprised of higher container board selling prices, which were more than offset by significantly lower uncoated fine paper and pulp selling prices, and Andrew will provide a little more colour on that in a couple of minutes. The cost increase is mainly in relation to labour inflation, with other costs well controlled. Input costs were overall flat year on year, against a muted economic backdrop. In the first quarter of 2026, we are seeing overall input costs remaining flat on 2025, despite some sizeable headwinds related to lower energy-related income and emission credits. And lastly, the forestry fair value gain, £32 million higher in the year when compared to prior year, all that adding up to the results of an underlying EBITDA of £001 million for the year. As Andrew said, we're cognizant of the impact from the current downturn and its effect on our near-term performance. So I wanted to spend some time outlining the actions we're taking to proactively manage the fixed cost base. Andrew will touch on operational excellence and productivity later. We execute targeted cost-out initiatives to drive efficiency. eliminate non-essential activities and strengthen the core revenue generating areas of the business. It is what we continuously do to improve. Whilst we do have targeted incremental costs in growth areas, whether that's due to new capacity or customer demand, we have reduced headcount over the last 12 months elsewhere by approximately 1,000 heads, driven from greater efficiency in our operations, plant closures, and about a 13% reduction in our group services offices. We've also recently announced three further plant closures, which will reduce headcount by approximately another 200 in the coming year. We combined our corrugated packaging and uncoated fine paper businesses into a single business unit, and that facilitates a more streamlined organisation, supporting faster decision-making, cost take-out and delivery of operational synergies across our pulp and paper mills, whilst retaining our customer-focused value chain orientation. And therefore, for the 2026 year, I expect these actions to offset labour and other cost inflation. Let me now take you through the movement in net debt. We started the year with 1.7 billion. You can see the EBITDA contribution I've taken you through of the billion. In terms of working capital, I'm really pleased with our delivery since the half year. As you'll remember, at the half, we outflowed about 100 million in the first six months, which tells you we drove around a 200 million inflow in the second half of the year to leave the total inflow that you see on the chart of 83 million euros. Including interest, tax and other items, the net result of these three items was cash delivered of 767 million euros, and you see that highlighted in the box on the slide. The next three columns shows how we've allocated capital in the year. We invested 673 million in property, plant and equipment, lower than the previously guided 750 to 850 million euros, driven by our ongoing focus on cash management. Dividends paid totaled £352 million. And lastly, we completed the acquisition of Schumacher, which expands our geographic reach, drives greater optimisation across our plant footprint, and unlocks efficiencies that support long-term growth. Integration remains on track. We're confident in the delivery of the 32 million cost synergies over the three years from completion, and that's an increase from the 22 million that we initially envisaged. So to conclude, all of that leaves the group with a net debt balance at the end of the year, 2.6 billion, which is 2.6 times 11. I also want to set out our robust financial position with investment grade credit ratings, our available liquidity totals around 1.3 billion euros and places us strongly to protect value in the short term and capture opportunities in the long term as they arise. We've refinanced short term debt maturities in the year and have no further debt maturities until 2028. And as a reminder, we have no financial covenants. Let me now take you through some capital allocation points starting on slide 9. So the group has a well invested and cost advantaged asset base in structurally growing packaging markets. Over the past few years we've invested in a number of major capacity expansion projects and we're very proud of the teams for completing the build and startup phase of these projects on time and on budget. Our focus is now on delivering full productivity ramp-up, executing our commercial strategy, driving cash generation and delivering strong returns. In addition to these growth projects we invest through the cycle in our asset base to maintain competitive advantage And you can see here in the grey bars that exclude those growth projects that this has averaged 107% of depreciation over the past five years. Our cash capital expenditure for 2026 is expected to be approximately €550 million, lower than the €650 million previously guided. Within the $550 million is approximately $50 million of cash still to flow for the growth projects, leaving a base of around $500 million. This spend will focus on maintenance and targeted cost optimisation opportunities, including enhancing energy efficiency, improving productivity and strengthening the resilience of our asset base. On to dividend, the Board does recognise the importance of dividends to our shareholders. Over the last two years we have consciously recommended dividends in excess of our policy, on each occasion carefully reviewing expectations for the coming period. Notwithstanding our continued confidence in the resilience and competitiveness of our business, Consistent with our objective of retaining financial flexibility, the Board has recommended a total ordinary dividend of €28.25 per share for 2025, reflecting a return to the Group's stated dividend cover policy of two to three times underlying earnings on average through cycle. And lastly, the technical guidance slide for 2026, hopefully all relatively self-intuitive. With that, let me hand back to Andrew. Thank you.