Mondi plc

Hello everyone and welcome to this MomD half-year results for 2026. Captions are enabled on Zoom, however these are automatic and can sometimes contain errors. If you would like to ask a question as part of our Q&A later, you can use the raised hand function and we will invite you through to ask your question in person. I will now hand over to Andrew King, CEO.

Good morning, everyone, and welcome to Monday's 2026 half year results presentation. I'm Andrew King, your group CEO, and I'm joined this morning by our CFO, Mike Powell. I'll begin with some key messages from the period under review and then Mike will take you through the financial performance in more detail. I'll return to provide an update on the performance of our business units and discuss some of the current market dynamics before taking you through various of the actions we are taking to strengthen our competitive advantage in what remains a volatile market backdrop. After that, Mike and I look forward to taking your questions. In the first half of 2026 we delivered underlying EBITDA of 379 million euros down on the prior year due mainly to margin pressure from lower average selling prices and higher input costs. We were able to partially mitigate these pressures through higher sales volumes, strong cost control and proactive pricing actions through the period. We remain focused on taking decisive action on those areas we can control. Tight control of working capital mitigated the fall in earnings, allowing us to generate cash from operations of 347 million in the period, while lower capital expenditure also contributed to a stable net debt position. We continue to take actions on cost, operational excellence and portfolio optimization while ensuring we are well positioned to serve our customers with our broad range of innovative, sustainable solutions. Together with the significant competitive advantage we continue to enjoy as a business, ensure that Bondi is strongly positioned both to withstand the current market pressures and capture the upside as market conditions improve. With that, let me hand you over to Mike for more comment on the financial performance.

Thank you Andrew and good morning everybody, thanks for joining. Now let me take you through the group's financial results. And starting with the main movements in underlying EBITDA for the first half of 2026 when compared to the first half of 2025. We achieved higher sales volumes across most of our packaging businesses driven by the ongoing ramp up of our major capacity expansion projects and an improvement in order books Sales prices were on average below the prior year. Pricing across all paper grades declined in the second half of 2025 and into early 2026, resulting in the groups starting the year at lower levels. Although price increases were implemented during the first half and with some initial benefits realised in the period, average prices for the half remained below the prior year. We expect to achieve the full effect of these price increases in the third quarter. Turning now to input costs which increased with higher wood costs in Central and Eastern Europe as well as the impact of higher energy and other categories due to the conflict in the Middle East. As we enter the third quarter, input costs do remain volatile and based on current spot remain above average input cost levels seen in the first half. Once you can see and follow the energy indexes publicly for yourself, there are costs which are firming and maybe a little counter-intuitive compared to the economic environment. As the demand for items such as furniture and European wood exports into the Middle East decline, we are seeing less harvesting volumes. Therefore, there's less storm activity resulting in lower wood supply and wood chips into the market. Alongside that, unlike Scandinavian markets where there is currently a degree of calamity wood, Central Eastern Europe has little calamity wood. These factors result in the cost of wood increasing in our Central Eastern European region and will continue to do so in the second half. These inter-European fluctuations are not untypical of what we see in regional markets from time to time. For forestry fair value, we recognise the loss in the period of £35 million compared to a gain of £18 million last year and that results in the £53 million delta that you see. This loss was mainly the result of a reduction in local wood prices in South Africa during the period and while the year end valuation will be based on prevailing prices at the time, Thank you very much. Thank you very much. Fixed costs we worked hard on were flat year-on-year, excluding the required shoe market cost base, which reflects the continued focus on cost control and driving efficiency improvements to offset inflationary cost pressures. And we'll touch more on some of these initiatives later in the presentation. The euro was mainly attributable to the weaker US dollar versus the euro, and hence was the year-on-year headwind. The dollar has largely been steady actually since the second half of 2025 and even recently shown a little bit of strengthening. Adding all that up results in an underlying EBITDA of the 379 million euros that you see on the right hand side of the page. Now looking now at cash flow movements during the period and our teams have worked really hard to mitigate the impact of lower earnings. What I've done here is I've simplified the cash flow because us accountants tend to make it rather complicated in the statutory format these days. So I'll start off with underlying EBITDA that you can see at the top of the slide and adjusting for the non-cash forestry fair value that I've just taken you through. Then as expected we had a working capital outflow in the period which we generally do experience in half year one due to seasonality effects as well as the impact of higher prices at the end of the period. Pleasingly, this movement was less than the equivalent period last year. And whilst not shown on the slide, when you do get a chance to look at the balance sheet, you'll see that our absolute total working income is €122 million lower than the balance at 30 June 2025. So really a real good testament to the strong focus on working capital management. The tax interest paid was higher, mainly driven by the timing of Eurobond coupon payments. That's only a timing issue. Investment in property, plants and equipment was around £140 million lower than the prior year, and we continue to apply rigorous discipline to new CAPEX approvals. Michael Andrew Powell, Jennifer Louise Hampshire Michael Andrew Powell, Jennifer Louise Hampshire So somewhat lower than previous guidance and well below last year's 690 million. I do want to be clear on this, we're not storing up an issue for the future here or risking safety or growth and the reductions are spread across a broad portfolio of smaller projects. Taking all that into account, while earnings were down on the prior year, versus the 18-hour outflow of last year shows that our cash movement generated from the business was largely unchanged. Dividend payments reflect the return of the full year dividend within cover range and taking all of the items into account including the acquisition of Schumacher in 2025, net debt was unchanged at £2.6 billion at 30 June 2026. While leverage is higher at 3.2 times at the end of the period, as can be seen at the bottom of the page, this is really driven by the lower 12 month trailing EBITDA, which does include a fair value loss for both of the periods shown. Moving forward, we expect leverage to reduce, supported by both the ongoing focus on cash management and the improving trading momentum. I now want to set out our robust financial position. We successfully refinanced our €1 billion RCF facility during this period. We also repaid the remaining balance of the Eurobond that matured in April 2026, which we'd already refinanced in October last year. The only notable debt maturity in the near term is the €750 million Eurobond due to mature in April 2028. So we remain strongly positioned with liquidity totalling €1.15 billion, an investment grade credit rating and a reminder we have no financial covenants. As you would have seen from our release this morning, we've recognised the €320 million of pre-tax special item charges in the period. This compromised a non-cash impairment charge of €296 million and cash restructuring and closure costs of €24 million, which we expect to flow out as cash. Impairment charges compromised 206 million euros at Arduino Mill in Italy and whilst Arduino continues to ramp up volumes in line with the plan and we remain confident in its long-term future the current outlook indicates a lower returns profile than previously anticipated with returns highly sensitive to energy import costs and selling price assumptions both of which are proving to be highly volatile in the current world. The remaining €90 million in payment charge was split between our noisy uncoated fine paper operations in Austria, the Schwarzenberg solid mill in Germany and the Stambolinski mill in Bulgaria that ceased operations in 2024. And lastly, technical guidance for 2026. After a normal review of the useful lives of our assets, we've reduced the expected depreciation and amortisation guidance for the year to approximately €475 million, which reflects our well-invested and well-maintained asset base. We've also reduced the guidance for the full-year impact of maintenance shuts from €100 million to €80 million, this reduction all attributable to the second half. So to draw to a close, we have and continue to take a number of actions to deliver earnings and cash resilience in the short term, whilst continuing to enhance leverage to the upside as markets improve.