MONDI (MNDI) SHARES IN 2025: PERFORMANCE, DRIVERS, RISKS

How did Mondi (MNDI) shares perform in 2025?

Mondi plc (LSE: MNDI), a leading global packaging and paper group, saw a year of steady if somewhat cautious growth in 2025 across its UK-listed shares. Recovering from market volatility in previous years, the company focused its efforts on cost optimisation, expanding sustainable product lines, and adapting to ongoing geopolitical and economic headwinds affecting energy prices and raw material costs.

By Q4 2025, Mondi’s shares had risen approximately 9.8% year-to-date, outperforming the FTSE 100 index, which hovered around a 6% gain for the same period. The company’s strong balance sheet, disciplined capital allocation, and operational efficiencies played a central role in boosting investor confidence amid a challenging macroeconomic backdrop.

Key performance indicators (KPIs) reflected Mondi’s resilience, including:

• Group revenue: £7.2 billion, a 4.3% increase from 2024
• EBITDA margin: Held at 17.1% despite energy price fluctuations
• Earnings per share (EPS): Up 6.4% year-on-year
• Capital expenditure: Maintained at disciplined levels, with a focus on sustainability and automation

Much of the investor optimism in 2025 stemmed from Mondi's strategic adaptation to the ever-increasing demand for sustainable and recyclable packaging materials, which benefited from EU and UK regulatory trends favouring eco-friendly supply chains.

Moreover, the company's decision to fully exit its Russian operations in 2024 allowed it to realign investment toward Western European markets and emerging growth opportunities in Africa and the Middle East, contributing positively to sentiment and stock trajectory.

What drove Mondi’s growth throughout 2025?

Several well-defined factors underpinned Mondi’s 2025 performance. While macroeconomic uncertainties persisted — including inflationary pressures, volatile energy markets, and weak industrial demand in some EU sectors — the company leveraged its vertical integration and flexible supply chains to maintain competitiveness and safeguard margin stability.

1. Sustainability and Innovation:

Mondi continued its strategic pivot towards eco-conscious packaging solutions, broadening biodegradable packaging and lightweight corrugated cardboard lines that respond to increasing consumer and regulatory demand for green alternatives. Their strong R&D pipeline helped launch new recyclable formats ideal for e-commerce, food service, and FMCG sectors.

2. Strategic CAPEX Allocation:

In 2025, Mondi strategically deployed capex to modernise its central European mills and boost automation in UK and German converting plants. These investments reduced operating costs while enhancing agility in product delivery and quality control — a core differentiator with increasing importance in the packaging sector.

3. Rebalanced Geographic Profile:

With the final withdrawal from Russia concluded, Mondi reallocated capital towards markets with stable regulations and eco-conscious policy frameworks. Investments into the UK, Italy, and South Africa fuelled geographic diversification, further insulating the business from political risks.

4. E-commerce Packaging Demand:

The explosion in e-commerce activity in Southern and Eastern Europe, particularly during mid-2025, led to an uptick in orders of containerboard and paper-based mailers, contributing to higher utilisation rates at several Mondi facilities.

5. Dividend Stability and Buyback Programmes:

Consistent shareholder returns through progressive dividend policies and modest buyback initiatives further supported total shareholder return (TSR), improving investor appetite.

Overall, Mondi’s growth in 2025 was marked by a pragmatic strategy focusing on core markets, operational reengineering, and ESG leadership across material innovation and business practices.

Key risks for investors and what to watch in 2026

Looking ahead into 2026, Mondi’s road remains promising but not without key risks and strategic considerations. The packaging and paper sector is sensitive to raw material pricing, regulatory developments, and industrial economic cycles — all of which remain dynamic in nature.

1. Energy and Input Price Volatility:

Mondi continues to absorb high energy costs, though it actively mitigates this through energy-efficient upgrades and renewable source uptake. However, any significant increase in lignin, kraft pulp, or electricity pricing would squeeze margins moving forward, despite the company’s vertical integration.

2. Substitution Threats:

While sustainable packaging gains ground, plastic remains a lower-cost alternative for many businesses outside the EU regulatory space. Pricing differentials could hinder adoption of biodegradable solutions, especially in emerging markets less receptive to green premiums.

3. Slower European Industrial Activity:

Mondi remains exposed to the health of European manufacturing and exports. Should economic stagnation or contraction persist in Germany or Italy — two of its major markets — order volumes in industrial packaging could decline.

4. Currency and Interest Rate Risks:

As a UK-listed global firm, Mondi’s earnings are susceptible to currency fluctuations involving the euro, rand, and pound sterling. Additionally, higher-for-longer interest rate environments could elevate borrowing costs or constrain expansion capex plans.

5. Regulatory Overheads:

Continued tightening of ESG regulations and ESG scoring expectations may increase operational complexity or necessitate further transformation investments. On the upside, this also reinforces first-mover competitive advantages.

What to watch in 2026:

• Margin resilience amid input cost pressure
• Capex execution progress across strategic mills
• New product deployments in biodegradable substrates
• Progress in African and Middle East expansion
• Dividend growth outlook for long-term investors
• Leadership stance on AI-enhanced automation

Consensus forecasts currently suggest low double-digit EPS growth for 2026, but much depends on market normalisation and margin management. Investors should also keep watch on any M&A developments, especially in the fibres and containerboard niche where Mondi has expressed acquisition interest. The outlook is cautiously optimistic but will require active monitoring of operating risks and global demand patterns.