Mondi shares rise as firm cuts divi, capex amid tough conditions

(Sharecast News) - Paper and packaging group Mondi slashed its dividend after a 29% slump in annual profits in 2025 and pointed to further declines in paper prices over the first quarter, though shares rose as investors welcomed a cut to capital expenditure guidance this year. The company declared a final dividend of just 4.92 euro cents for 2025, down from 46.67 cents the year before, taking the total payout to just 28.25 cents, down from 70 cents previously.

Chief executive Andrew King said the board is taking "clear and disciplined decisions on capital allocation", including moving its dividend back in line with the group's cover policy of two to three times underlying earnings. Decisions also include a planned €100m reduction in capital expenditure in 2026 to €550m and further cost-optimisation opportunities, he said.

"Combined with our robust financial position and proactive liquidity management, these actions put us on a strong footing for the year ahead and position us well for the future, King said.

Pre-tax profits totalled €269m in 2025, down from €378m the year before, as margins were hit by sharply lower uncoated fine paper and pulp selling prices. That outweighed a 3% improvement in revenues to €7.66bn on the back of higher sales volumes and revenue contribution from the acquisition of Schumacher Packaging's Western Europe operations, which completed last April.

However, according to analysts at Jefferies, profits for the fourth quarter were slightly better than feared. The broker said that while it was "disappointed" by the size of the dividend cut, the results "seem like the clearing event the stock needed given the short interest".

The stock was up 2.7% at 949.41p by 1507 GMT.

Looking at the year ahead, King said it was still unclear when geopolitical and macroeconomic conditions could improve, with paper prices falling further in the first quarter.

"We are, however, confident in our ability to navigate these headwinds effectively through disciplined volume growth as we leverage our recent capacity expansions, strong margin management and cost optimisation," King said.

Commenting on the results, AJ Bell investment director Russ Mould said: "Profits lived down to the low expectations set by autumn's profit warning, as pre-tax income fell by almost a third, and management sanctioned a 60% cut in the dividend, but cuts to capital expenditure and costs should mean the company's profits are very sensitive to any improvement in volumes, demand or pricing."

He added: "Patient investors may feel this is an opportunity to reassess Mondi in light of any potential recovery in the paper and packaging cycle, which could come from a better economic outlook, industry self-help in the form of capacity closures or a combination of the two."