Half-yearly results for the six months ended 30...

Half-yearly results for the six months ended 30 June 2018

3 August 2018

2

Mondi: Forward-looking statements disclaimer

This document includes forward-looking statements. All statements other than statements of historical facts included herein, inc luding, without limitation, those regarding Mondi’s financial position, business strategy, market

growth and developments, expectations of growth and profitability and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are sometimes identified by the use

of forward-looking terminology such as “believe”, “expects”, “may”, “will”, “could”, “should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “plans”, “predicts”, “continues”, “assumes”, “positioned” or “anticipates” or the negative

thereof, other variations thereon or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements

of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements and other statements

contained in this document regarding matters that are not historical facts involve predictions and are based on numerous assumptions regarding Mondi’s present and future business strategies and the environment in which

Mondi will operate in the future. These forward-looking statements speak only as of the date on which they are made.

No assurance can be given that such future results will be achieved; various factors could cause actual future results, performance or events to differ materially from those described in these statements. Such factors include in

particular but without any limitation: (1) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development plans and targets, changes

in the degree of protection created by Mondi’s patents and other intellectual property rights and the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition,

prevailing and future global market prices for Mondi’s products and raw materials and the pricing pressures thereto, financia l condition of the customers, suppliers and the competitors of Mondi and potential introduction of

competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in Mondi’s principal geographical markets or fluctuations of exchange rates and interest rates.

Mondi expressly disclaims

a) any warranty or liability as to accuracy or completeness of the information provided herein; and

b) any obligation or undertaking to review or confirm analysts’ expectations or estimates or to update any forward-looking statements to reflect any change in Mondi’s expectations or any events that occur or circumstances that

arise after the date of making any forward-looking statements,

unless required to do so by applicable law or any regulatory body applicable to Mondi, including the JSE Limited and the LSE.

3

Highlights

Financial overview

Market and operational review

Key strategic developments

Outlook

Appendices

4

730 752 852

18.5%19.3%

21.3%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

H1 2017 H2 2017 H1 2018

ROCE (%)

● Strong financial performance

○ Underlying EBITDA of €852 million, up 17%, margin of 22.9%

○ Profit before tax of €490 million, up 6%

○ Basic underlying earnings of 89.2 euro cents per share, up 26%

○ Cash generated from operations up 18%

○ Return on capital employed 21.3%

● Excellent performance from Packaging Paper

● Good progress on major capital investment projects

● Integration of recent acquisitions on track, expanding the Group’s

containerboard portfolio and network of industrial bag plants in

high growth regions

● Interim dividend declared of 21.45 euro cents per share

71.0 77.9 89.2

H1 2017 H2 2017 H1 2018

Strong financial performance

Underlying EBITDA and ROCE€ million

Basic underlying earnings per shareeuro cents per share

+

Highlights

The Group early adopted the new 'Leases' accounting standard, IFRS 16. All 2017 comparative figures in this presentation have been restated where applicable.

5

Highlights

Financial overview



Outlook

Appendices

6

Operating financial highlights

€ million

H1

2017

H2

2017

H1

2018

% change

vs H1 2017

% change

vs H2 2017

Group revenue 3,582 3,514 3,727 4% 6%

Underlying EBITDA 730 752 852 17% 13%

% Margin 20.4% 21.4% 22.9%

Underlying operating profit 503 526 630 25% 20%

% Margin 14.0% 15.0% 16.9%

Group ROCE 18.5% 19.3% 21.3%

Strong performance on all key metrics

7

Underlying EBITDA development

Higher average selling prices more than offsetting higher costs and negative currency effects

H1 2017 Sales

volumes

Variable

costs

Cash fixed

costs

Fair value

gain on forestry

assets

H1 2018

730

338 (123)

(28)(50)

(8) 852

Currency

effects

(7)

Underlying EBITDA development€ million

Other

0

Sales

prices

8

730

852

1 Breakdown excludes corporate costs

Business unit contribution

50%

12%

12%

26%

Packaging Paper

Fibre Packaging

Consumer Packaging

Uncoated Fine Paper

H1 2017 Packaging

Paper

Fibre

Packaging

Consumer

Packaging

Uncoated

Fine Paper

Corporate H1 2018

4 (6)

(28)

(10)129

Business unit underlying EBITDA development€ million

H1 2018 underlying EBITDA contribution by business unit¹%

+

5

Fibre packaging value chain – main contributor to EBITDA growth

Fibre packaging

value chain

9

Financial review

€ million

H1

2017

H2

2017

H1

2018

% change

vs H1 2017

% change

vs H2 2017


Depreciation, amortisation and impairments (227) (226) (222) 2% 2%

Underlying operating profit 503 526 630 25% 20%

Net finance costs (47) (38) (40) 15% (5%)

Net profit from equity accounted investees – 1 –

Underlying profit before tax 456 489 590 29% 21%

Underlying tax charge (87) (94) (132) (52%) (40%)

Non-controlling interests (25) (18) (26) (4%) (44%)

Underlying earnings 344 377 432 26% 15%

Special items (after tax and non-controlling interests) 5 (58) (81)

Profit after tax and non-controlling interests 349 319 351 1% 10%

Basic earnings per share (euro cents) 72.1 65.8 72.5 1% 10%

Basic underlying earnings per share (euro cents) 71.0 77.9 89.2 26% 15%

10

● Net debt was up due to:

○ payment of the 2017 special dividend

(€484 million)

○ completion of acquisitions (€415 million1)

● Lower finance costs driven by a lower

effective interest rate

● In April 2018, issued a 1.625% €600 million

Eurobond with an 8-year tenor extending

the Group’s maturity profile and maintaining

our strong liquidity

● Public credit ratings

○ Standard & Poor’s upgraded to BBB+

(stable outlook)

○ Moody’s Investors Service maintained at

Baa1 (stable outlook)

Net debt and interest

€ millionH1

2017

H2

2017

H1

2018

Net debt 1,679 1,532 2,450

Average net debt 1,564 1,596 1,708

Net interest expense2

(before capitalised interest) 43 32 37

Effective interest rate 5.5% 4.0% 4.3%

Committed facilities 2,005 1,987 2,532

Of which undrawn 667 791 429

Net debt/12-month trailing underlying EBITDA (times) 1.2 1.0 1.5

+

1 On a debt and cash-free basis2 Interest expense on bank overdrafts, loans and lease liabilities net of investment income

Maintaining a robust financial position

11

Cash flow effects – movement in net debt

Investment in the business and distribution to shareholders

Net debt at

31 December

2017

Cash generated

from operations

(excluding

working capital)

Ordinary

dividends

paid1

Tax and

interest paid

and other

Movement

in working

capital

Capital

expenditure

and investment

in forestry

assets

Acquisitions2

1,532 (870) 224

375143

2,450

Net debt at

30 June

2018

148

Movement in net debt€ million

414

1 To shareholders and non-controlling interests 2 Excludes €1 million of deferred acquisition consideration

484

1,552

Special

dividend

paid

Net debt before

acquisitions and

special dividend

21.4519.10

20142013 2015 2016 2017¹ 2018

12

Continued growth in shareholder returns

Total ordinary dividend

CAGR: 15%

Dividends declaredeuro cents per share

Interim dividend Final dividend

36

42

52

57

62

Interim dividend of 21.45 euro cents per share declared

1 Excludes 2017 special dividend of 100 euro cents per share which was distributed in addition to the ordinary dividend

13

Reorganisation of business units

● Effective from 1 August 2018, the Group reorganised its business units to achieve improved strategic alignment and

operational coordination across the fibre based packaging value chain

● The changes to the Group’s business units, and consequently to the Group’s segmental reporting, are as follows:

○ Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging

○ No changes to the Consumer Packaging or Uncoated Fine Paper business units

● The reorganisation has no impact on the overall Group result

● The Group’s restated segmental reporting is disclosed in the half-yearly results announcement

14

Highlights

Financial overview



Outlook

Appendices

15

301 338 430

22.8%

25.6%

31.3%26.4%

29.4%

32.8%

H1 2017 H2 2017 H1 2018

ROCE Underlying EBITDA margin

● Strong performance – underlying EBITDA up 43%

● Driven by:

○ higher selling prices

○ higher sales volumes

○ mix improvements

○ cost reduction programmes

● Partly offset by:

○ higher costs, with the exception of paper for recycling

○ negative currency effects

● Decision taken to stop production of in-line silicone coated

products at Štětí – production of speciality kraft paper to

continue, with off-line coating at our release liner operations

● Completed sale of flat sack kraft paper mill in Pine Bluff,

Arkansas (130ktpa capacity)

● Powerflute acquisition completed

Packaging Paper

Underlying EBITDA, margin and ROCE€ million

+

Packaging Paper Fibre Packaging Consumer Packaging Uncoated Fine Paper

300

400

500

600

700

800

900

06/2013 06/2014 06/2015 06/2016 06/2017 06/2018

16

Source: FOEX Indexes Ltd

Containerboard

● Markets remain robust: good demand and limited

capacity additions continue to support pricing

● Higher average selling prices following increases

implemented during 2017 and Q1 2018

● Further price increases of €40/tonne announced for

selected virgin containerboard grades in Europe from

September 2018

Packaging Paper | industry fundamentals

White top kraftlinerUnbleached kraftliner

Selling prices€/tonne

+


Recycled containerboard

17

0.80

0.85

0.90

0.95

1.00

1.05

1.10

06/2013 06/2014 06/2015 06/2016 06/2017 06/2018

Source: Mondi

Sack kraft paper

● Implemented sack kraft paper price increases (8% to 9%

on 2017 average) from January 2018

● Markets remain very tight

○ good demand, particularly in our export markets

○ constrained supply

● Further price increases of 5% to 7% implemented in

Europe by the end of Q2 (most volumes integrated)

Speciality kraft paper

● Good demand

● Higher average selling prices on H1 and H2 2017

● Drive to replace plastic carrier bags with paper based

alternatives

Packaging Paper | industry fundamentals

Unbleached sack kraft paper - Europe

Selling pricesPrices indexed to June 2013

+


101 93 105

13.0%

11.2% 11.2%

9.8%

9.1%

9.8%

H1 2017 H2 2017 H1 2018


18

Corrugated Packaging

● Implemented price increases to compensate:

o higher paper input costs

o negative currency effects

● Continues to benefit from growing e-commerce activity

● Stable sales volumes on strong comparable prior year

● Focus on continuous improvement to reduce conversion costs

and further enhance product offering, quality and service

Industrial Bags

● Volume growth of 3.6% compared to H1 2017

● 2018 annual contracts – price increases largely reflect the full

cost impact of paper price increases

● Good cost management and benefit from restructuring measures

● Acquired Egyptian industrial bags plant in June 20181 and agreed

to acquire a control position in another plant near Cairo

● Working closely with Consumer Packaging to develop paper

based packaging solutions

Fibre Packaging

+



1 For EGP510 million (€25 million) on a debt and cash-free basis

19

● Steady underlying performance offset by negative currency

and one-off effects

● Benefiting from:

○ good growth in selected value-added segments in

technical films and consumer goods packaging

○ programme launched in the second half of 2017 to

restructure the cost base

● Short-term performance held back by declining volumes in

personal care components and certain weaker plants in the

portfolio

● Progressing with restructuring our UK operations, including

the closure of our plant in Scunthorpe

● New business opportunities for flexible packaging – typically

uses 70% less plastic than rigid based alternatives

Consumer Packaging

+

109 113 103

9.8%10.4% 10.4%

13.0%

14.0%

12.5%

H1 2017 H2 2017 H1 2018




20

● Strong performance

○ Underlying EBITDA of €230 million

○ ROCE of 26.5%

● Higher average selling prices offset by:

○ higher costs

○ extended shut at Richards Bay

○ lower fair value gain on forestry assets

○ negative currency effects

● Ceasing production at one of our uncoated fine paper

machines at Merebank during H2 2018 (70ktpa capacity)

● Acquired around 11,000 hectares of well-located forest

plantations in KwaZulu-Natal (South Africa)1

Uncoated Fine Paper

+

240 224 230

27.1% 26.6% 26.5%

25.3% 25.3% 24.4%

H1 2017 H2 2017 H1 2018




1 For ZAR408 million (€27 million) on a debt and cash-free basis

21

500

550

600

650

700

750

800

850

900

06/2013 06/2014 06/2015 06/2016 06/2017 06/2018

A4 B-copy Pulp (BHKP)

Source: FOEX Indexes Ltd

Uncoated Fine Paper

● Higher European prices following the implementation of

price increases during 2017 and at the end of March 2018

● Mondi’s uncoated fine paper sales volumes higher in

H1 2018 on prior year despite ongoing structural demand

decline in mature markets – continue to benefit from:

○ superior cost positioning

○ emerging market exposure

● Implemented further price increases in July of 2% to 6% for

our range of uncoated fine papers in Europe with a further

price increase of up to 6% announced for

implementation in September

Uncoated Fine Paper | industry fundamentals

Pulp and A4 B-copy prices€/tonne

+


22

Highlights

Financial overview



Outlook

Appendices

23


1 On a debt and cash-free basis

Leveraging key industry trends – sustainability, e-commerce and convenience

Acquisitions totalling €415 million1 completed in H1 2018:

o Powerflute (Finland): €363 million

o NPP (Egypt): €25 million

o Forest plantations (South Africa): €27 million

Štětí kraft paper mill modernisation project on track to start-up towards the end of

the year

Ružomberok kraft top white machine (300 ktpa) expected start-up in 2020

(subject to permitting), pulp mill upgrade ongoing

Seeking opportunities to leverage customer relationships and product know-how –

uniquely positioned as a leading producer of both plastics and paper based solutions

Joined the Ellen MacArthur Foundation New Plastics Economy Initiative – actively

working with stakeholders to find innovative solutions that improve the sustainability

of packaging

Growing through acquisitions

Progress made on major capital expenditure

projects

Sustainable packaging

Finding solutions with our customers

24

BarrierPack recyclable

● Fully recyclable new plastic laminate, recipient of the ‘Best Technology Innovation in Plastics Recycling’ award1

● Sustainable packaging solution, with quality and functionality performance properties equivalent to conventional materials

● Supports circular economy principles

shoppingworld by Mondi

● Leading European speciality kraft paper producer offering a broad range of paper grades for bags and shoppers – 1st

European shopping bag summit organised by Mondi in April 2018

● White or brown, for food or fashion, entirely virgin-based or with recycled fibres, highly functional or strikingly attractive

● Outstanding quality paper grades to enhance brand awareness and positive consumer shopping experience

Point-of-sale: Baca Stand

● Awarded with a World Star award● An easy forming, tape-free corrugated

display solution consisting of modular trays with a mid-support structure

● Enabling simple and fast filling during production as well as easy access for end-consumers

● Scores in terms of efficiency as it uses 46% less material and requires 20% less handling time per pallet compared to conventional stack boxes1 2018 Plastics Recycling Europe Awards

25

Highlights

Financial overview



Outlook

Appendices

26

Outlook

The trading environment remains positive going into the second half of the year, with pricing in key fibre based product

segments remaining supportive. The second half of the year will be impacted by the usual seasonal downturn in Uncoated

Fine Paper. We also expect continued pressure on the cost base across the Group, mitigated by our ongoing proactive and

comprehensive cost reduction programmes.

Mondi is uniquely positioned to develop sustainable fibre and plastic based packaging solutions. With our robust business

model, focus on leveraging key industry trends of sustainability, e-commerce and convenience, and culture of driving

performance, we remain confident of sustaining our track record of delivering value accretive growth.

Summary

29

Highlights

Financial overview



Outlook

Appendices

30

Mondi at a glance

2017

revenue1

&

underlying

EBITDA

margin

Products

22.3% 13.5% 25.3%

€3,735m €1,646m €1,832m

52%

1 Segment revenues, before elimination of inter-segment revenues2 Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging effective from 1 August 2018

Consumer Packaging Uncoated Fine Paper Fibre Packaging2

23%

25%

31

Leading market positions

Consumer flexible

packaging

Kraft paper

Industrial

bags

#3

Corrugated

packaging

Virgin

containerboard

Containerboard

Commercial

release liner

Global

Uncoated

fine paper

Please see sources and definitions at the end of this document

Europe Emerging Europe South Africa

Uncoated

fine paper

#1

32

Strong global presence

Revenue by location of customer%

Revenue by location of production%

+

23%

39%

9%

6%

10%

13%

Emerging Europe Western Europe Russia South Africa North America Other

35%

36%

13%

8%

7%1%

Group revenue: €3,727 million Group revenue: €3,727 million

33

Technical guidance

2018 guidance

Capital expenditure range in 2018 and 2019 (per annum) €700 – 800 million

Depreciation and amortisation €440 – 470 million

Estimated impact of maintenance shuts ± €115 million

Working capital as a % of turnover 12 – 14%

Effective tax rate ±22%

34

Our cash flow priorities remain unchanged

Free cash flow

priorities

As appropriate

Maintain our strong and stable financial position

and investment grade credit metrics

Support payment of dividends to our shareholders

Evaluate growth opportunities through M&A and/or

increased shareholder distributions

Grow through selective capital

investment opportunities

35

Creating sustainable value through our strategic framework

36

Our cost advantaged operations

1 Includes unbleached kraftliner, white top kraftliner, nordic and semi chemical fluting, testliner, recycled fluting, unbleached sack kraft paper, bleached sack kraft paper, uncoated fine paper(including value added grades) and BHKP

2 Based on delivered cost to Frankfurt except BHKP (delivered to Rotterdam), uncoated fine paper – Merebank (delivered to South Africa) and recycled containerboard – Tire (delivered to Turkey)3 European capacity except white top kraftliner, bleached & unbleached sack kraft paper and BHKP (global capacity) and uncoated fine paper – Merebank (South Africa only) Source: RISI and Mondi estimates, Q1 2018. BHKP ZAR/EUR FX rate adjusted to closing rate (at 30 June 2018) of 16.05

Mondi capacity by quartile of relevant industry cost curve1, 2, 3

%

1st quartile:

53%2nd quartile:

26%

Around 80% in the 1st or 2nd cost quartile

37

Acquisitions completed during H1 2018

Powerflute

● Acquired for a total consideration of €363 million on a debt and cash-free basis

(completed June 2018)

● Integrated pulp and paper mill in Kuopio (Finland) with an annual production capacity of

285,000 tonnes of high-performance semi-chemical fluting

● Production sold to a diverse range of customers, primarily for packaging fresh fruit and

vegetables, but also other end-uses such as electronics, chemicals and pharmaceuticals

● Around half of the company’s production is sold in Europe, while the remainder is exported

globally

Egyptian industrial bags plants

● Acquired NPP in June 2018, an industrial bags producer, operating one plant in Giza

near Cairo (Egypt) for a total consideration of €25 million (EGP510 million) on a debt and

cash-free basis

● Acquisition further expands our production network in the fast growing Middle East region

● Mondi signed an agreement to acquire a control position in another plant near Cairo in

December 2017, completion expected in Q3 2018

38

562 595 465 611 347

159% 164%

124%

138%

158%

-5%

15%

35%

55%

75%

95%

115%

135%

155%

175%

0

100

200

300

400

500

600

700

800

2014 2015 2016 2017 2018¹ 2019

Capex and investment in intangible assets as a % ofdepreciation, amortisation and impairments

Continued investment in our world class asset base

70

0 –

80

0

35

0 –

45

0

Capital expenditure€ million

€770 million

committed to major

capital projects

(2013 – 2016)

● Good contributions from recently completed

capital projects

● Ongoing progress made on our major capital

expenditure programme, totalling over

€750 million and securing future growth

● Key projects expected to increase the

Group’s current saleable pulp and paper

production by around 9% when in full

operation

+

‘ Over €750 million ’

approved major capital

expenditure projects

(2017+)

1 €347 million and 158% relate to H1 2018

39

Ongoing major capital investment projects

● Replacement of recovery boiler, rebuild of fibre lines and

debottlenecking of paper machines

● Benefits:

o increased saleable production – 90,000 tonnes per annum

market pulp and 55,000 tonnes per annum packaging paper

o reduced environmental footprint, increased electricity

self-sufficiency, lower production costs

● In progress, expected start-up in late 2018

● 300,000 tonne per annum kraft top white machine

● Debottlenecking pulp mill – increasing capacity by 100,000

tonnes per annum (to be mostly integrated into containerboard)

● Incentives received

● Pulp mill upgrade in progress, start-up expected in late 2019

● Paper mill expected start-up in 2020 (subject to permitting)

Ružomberok mill, Slovakia Štětí mill, Czech Republic

2014 2016

2012 2015 2017

Ṥwiecie minorities

(Containerboard)

Strong track record of acquisitions

40

Nordenia

(Consumer Packaging)

2 Duropack plants

(Corrugated)

Intercell

(Industrial Bags)

Graphic Packaging plants

(Industrial Bags)

Ascania


KSP


Uralplastic


Kalenobel


SIMET

(Corrugated)

Lebedyan

(Corrugated)

Excelsior Technologies


€2.0 billion invested in acquisitions since 2012

2018Powerflute

(Containerboard)

NPP

(Industrial Bags)

● Fibre Packaging

● Consumer Packaging

Pulp and paper integrated value chain (pro-forma 2017)1

41

Net exposure 1.7 mt

Consumption3 0.3 mt

Net exposure balanced

Consumption3 0.6 mt

Net exposure 0.3 mt

Consumption3 0.8 mt

External sales 1.6 mt

Net exposure 0.2 mt

Mondi managed

forests

AAC: 8 million m3

Paper mill4

5.3 mt

Externally procured

wood

13 million m3

Internally procured

wood2

4 million m3

Paper for

recycling 1.3 mt

Pulp mill

4.5 mt

1 Adjusted for the acquisition of Powerflute (0.3mtpa of virgin containerboard) and the disposal of Pine Bluff (0.1mtpa of kraft paper)

2 Due to commercial, logistic and sustainability considerations, the actual wood procured from our managed forests was lower than the annual allowable cut (‘AAC’)

3 Total consumption (aggregate of internal and externally procured packaging paper)

4 In addition to the 1.6mt of uncoated fine paper, the Group also produced 0.3mt of newsprint in 2017

Virgin

containerboard

2.0 mt

Recycled

containerboard

0.6 mt

Kraft paper

1.1 mt

Uncoated fine

paper4

1.6 mt

42

With an integrated approach to sustainable development

Looking ahead to 2020: 16 commitments across 10 action areas

Our Growing

Responsibly

model

Employee and contractor safety

● Avoid work-related fatalities

● Prevent life-altering injuries

● Reduce TRCR by 5% against 2015

A skilled and committed workforce

● Engage with our people to create a better

workplace

Fairness and diversity in the workplace

● Promote fair working conditions in the

workplace

Sustainable fibre

● Maintain 100% FSC™ certification of our forests

and promote sustainable forest management

● Procure a minimum of 70% of wood from FSC

or PEFC™ certified sources with the balance

meeting our company minimum wood standard

Climate change

● By 2030, reduce specific CO2e emissions by

15% against 2014¹

Solutions that create value for our customers

● Encourage sustainable, responsibly produced

products

Relationships with communities

● Enhance social value to our communities through

effective stakeholder engagement and meaningful

social investments

Supplier conduct and responsible procurement

● Encourage supply chain transparency and promote

fair working conditions together with our key suppliers

Biodiversity and ecosystems

● Promote ecosystem stewardship in the landscapes

where we operate through continued multi-

stakeholder collaboration

Constrained resources and environmental

impacts

● By 2020, reduce against 2015:

○ specific contact water consumption (5%)1

○ specific waste to landfill (7.5%)

○ specific NOx emissions (7.5%)1

○ specific effluent load (COD) (5%)

1 From our pulp and paper mills

43

0

500

1,000

1,500

2,000

H1 2017 H2 2017 H1 2018

Pulp Paper Wood Paper for recycling Energy Chemicals Plastics Other variable costs

Input costs

Variable costs€ million

44

23.3%22.9%

22.6%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

0

200

400

600

800

1,000

1,200

H1 2017 H2 2017 H1 2018

Depreciation, amortisation and impairments Other net operating expenses

Personnel costs Maintenance and other indirect expenses

Fixed costs excluding depreciation, amortisation and impairments as a % of revenue

Fixed costs

Fixed costs composition (excluding special items)€ million

45

Net special item charge in H1 2018 – €100 million pre-tax

Packaging Paper (€55 million)

● Discontinuation of in-line silicone coating production at Štětí. Restructuring costs of €8 million and related impairment of

assets of €47 million were recognised

Consumer Packaging (€27 million)

● Restructuring of operations, primarily in the United Kingdom. Restructuring costs of €9 million and impairment of assets

of €15 million were recognised

● Following the discontinuation of in-line silicone coating production at Štětí, restructuring costs of €3 million and related

impairment of €2 million, offset by reversal of impairment of assets of €2 million, were recognised

Uncoated Fine Paper (€18 million)

● Closure of an uncoated fine paper machine at Merebank. Restructuring costs of €13 million and related impairment of

assets of €5 million were recognised

46

Taxation

● Effective tax rate of 22%, above the

comparable prior year period and in line with

our expectation

● Increase partly due to the full utilisation in 2017

of key tax incentives in Poland. In addition, in

the prior year we recognised deferred tax

assets related to previously unrecognised tax

losses

Working capital

● Net cash outflow of €148 million (H1 2017:

€141 million)

● Higher than December 2017 reflecting the

usual seasonal uptick in the first half of the year

compounded by increasing average selling

prices

Taxation and working capital

€ million

H1

2017

H2

2017

H1

2018

% change

vs H1

2017

% change

vs H2

2017

Underlying tax charge 87 94 132 (52%) (40%)

Income tax paid 73 78 110 (51%) (41%)

Effective tax rate 19% 19% 22%

960 899 1,065

13.4%12.7%

14.3%

H1 2017 H2 2017 H1 2018

Working capital Working capital as a % of revenue

Working capital management€ million

+

Taxation

47

Cash flow (reconciling to movement in net debt)

1 On a debt and cash-free basis2 H1 2018 excludes €1 million of deferred acquisition consideration

€ million

H1

2017

H2

2017

H1

2018

% change

vs H1 2017

% change

vs H2 2017


Working capital movements (141) 19 (148)

Other operating cash flow items 23 (20) 18

Cash generated from operations 612 751 722 18% (4%)

Income tax paid (73) (78) (110) (51%) (41%)

Dividends received from other investments – 1 –

Net cash generated from operating activities 539 674 612 14% (9%)

Capital expenditure (254) (357) (347) (37%) 3%

Investment in forestry assets (25) (24) (28) (12%) (17%)

Acquisitions1,2

(43) (5) (414)

Interest paid (59) (38) (32) 46% 16%

Dividends paid to shareholders (180) (93) (691)

Dividends paid to non-controlling interests (21) (1) (17)

Other investing and financing activities (41) (9) (1)

Net (increase)/decrease in net debt (84) 147 (918)

48

Statement of financial position

€ million

30 June

2017

31 December

2017

30 June

2018

Property, plant and equipment 3,994 4,128 4,187

Goodwill 696 698 932

Working capital 960 899 1,065

Other assets 516 529 506

Other liabilities (693) (715) (724)

Net assets excluding net debt 5,473 5,539 5,966

Equity 3,490 3,683 3,188

Non-controlling interests in equity 304 324 328

Net debt 1,679 1,532 2,450

Capital employed 5,473 5,539 5,966

49

Production volumes

H1

2017

H2

2017

H1

2018

% change

vs H1 2017

% change

vs H2 2017

Packaging Paper

Containerboard '000 tonnes 1,119 1,178 1,189 6% 1%

Kraft paper '000 tonnes 606 600 605 – 1%

Softwood pulp '000 tonnes 1,005 1,005 1,028 2% 2%

Hardwood pulp '000 tonnes 250 297 292 17% (2%)

Fibre Packaging

Corrugated board and boxes million m2 820 830 814 (1%) (2%)

Industrial bags million units 2,513 2,439 2,600 3% 7%

Extrusion coatings million m2 667 614 665 – 8%

Consumer Packaging million m2 3,783 3,654 3,819 1% 5%

Uncoated Fine Paper

Uncoated fine paper '000 tonnes 818 826 840 3% 2%

Softwood pulp '000 tonnes 197 178 174 (12%) (2%)

Hardwood pulp '000 tonnes 675 670 587 (13%) (12%)

Newsprint '000 tonnes 159 118 102 (36%) (14%)

50

Exchange rates

H1

2017

H2

2017

H1

2018

% change1

vs H1

2017

% change1

vs H2

2017

Closing rates against the euro

South African rand 14.92 14.81 16.05 (8%) (8%)

Czech koruna 26.20 25.54 26.02 1% (2%)

Polish zloty 4.23 4.18 4.37 (3%) (5%)

Pounds sterling 0.88 0.89 0.89 (1%) –

Russian rouble 67.54 69.39 73.16 (8%) (5%)

Turkish lira 4.01 4.55 5.34 (33%) (17%)

US dollar 1.14 1.20 1.17 (3%) 3%

Average rates for the period against the euro

South African rand 14.31 15.78 14.89 (4%) 6%

Czech koruna 26.78 25.87 25.50 5% 1%

Polish zloty 4.27 4.24 4.22 1% –

Pounds sterling 0.86 0.89 0.88 (2%) 1%

Russian rouble 62.76 69.04 71.96 (15%) (4%)

Turkish lira 3.94 4.30 4.96 (26%) (15%)

US dollar 1.08 1.18 1.21 (12%) (3%)

1 (Weaker/devaluation of currency against euro) / Stronger currency against euro

51

Market position sources and definitions

Europe – Europe including Russia and Turkey

Emerging Europe – Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary,

Latvia, Lithuania, Macedonia, Malta, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey, Ukraine

North America – Canada, Mexico, USA

Virgin containerboard (Europe) and Containerboard (emerging Europe) based on capacity (including kraft top liner) – Source: RISI European Paper Packaging

Capacity Report and Mondi estimates

Kraft paper (Global) based on capacity – Source: RISI European Paper Packaging Capacity Report, RISI Mill Asset Database, Pöyry Smart Terminal Service and

Mondi estimates

Corrugated packaging (emerging Europe) based on production – Source: Henry Poole Consulting and Mondi estimates

Industrial bags (Global) based on sales volume – Source: Eurosac, Freedonia World Industrial Bags 2016 study and Mondi estimates

Consumer flexible packaging (Europe) based on sales – Source: PCI Wood Mackenzie – Flexible Packaging, European Supply/Demand report, 2017

Commercial release liner (Europe) based on sales volumes – Source: AWA European Release Liner Market Study and Mondi estimates

Uncoated Fine Paper (Europe) based on sales volumes (Ilim JV considered separate from IP) – Source: Euro-Graph delivery statistics, EMGE Woodfree

Forecast, EMGE World Graphic Papers, RISI Mill Asset Database, Eastconsult and Mondi estimates

Uncoated Fine Paper (South Africa) based on Mondi estimates

Mondi region definitions

Sources for market position estimates

Half-yearly results for the six months ended 30...

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