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Global packaging and paper company Mondi is speeding up its restructuring programme as it moves from building new capacity to improving efficiency, cutting costs and making the business more competitive after a difficult first half of its 2026 financial year.The group said on Thursday that it is now focused on getting more value from its existing operations by improving productivity, managing costs more tightly and generating more cash. This comes after higher input costs, lower selling prices and supply chain disruptions linked to tensions in the Middle East hurt its interim performance.Underlying earnings before interest, tax, depreciation and amortisation (ebitda) fell to €379m from €564m a year earlier. Basic underlying earnings dropped to 11.6 euro cents per share from 42.7c. Revenue increased slightly to €3.98bn, helped by the Schumacher business it acquired and higher sales volumes.CEO Andrew King said the group made progress in improving the business despite difficult trading conditions.“During the first half of 2026, we made good progress in delivering actions to strengthen Mondi’s performance, cash generation and competitiveness, supported by the strength of our quality product offering, high service levels and the agility and commitment of our people.“We took strong pricing actions, maintained cost discipline, progressed our plant network optimisation programme and continued to drive operational excellence across the business,” he said.A big part of Mondi’s plan is improving how its factories operate. The group has announced the closure of six converting plants across Europe, with two already shut and the remaining four expected to close year-end. Mondi said production will be moved to larger and more efficient factories so it can lower costs, improve productivity and better serve customers.Schumacher businessThe restructuring programme also includes simplifying parts of the business, reducing overhead costs and improving the way its operations are managed. Mondi has combined some business units, reduced staff in its group services offices and continued integrating the Schumacher business into its corrugated packaging operations.“In total, the six converting plant closures are expected to reduce headcount by approximately 580 roles by year end, with around 800 customers transferred and 30 items of large production equipment relocated across the network.”The company is introducing a new operational excellence programme across its mills and factories. The programme aims to reduce equipment breakdowns, improve productivity, use energy more efficiently and improve the quality of production.Mondi is tightening its spending after completing most of its large expansion projects. The group said it has reduced its expected capital spending for 2026 to about €500m from €550m previously, with future spending earmarked for maintaining its assets while keeping strict control over costs.The company recorded a €320m special charge during the period, mainly because it reduced the value of some of its assets. The biggest write-down was at its recycled containerboard mill in Italy, where weaker market growth, too much industry capacity, trade barriers and higher energy costs have lowered the expected returns from the investment.Even with these challenges, Mondi said recent investments are starting to support growth. The company has added about 300,000 tonnes of new production capacity this year, helping it supply more paper-based packaging products and win new business, particularly in the growing e-commerce market.King said trading improved during the first half, and the company enters the second half with stronger packaging paper prices and solid customer demand.“As major expansionary investments are now largely complete, our focus is on disciplined commercial execution to deliver growth, while relentlessly identifying and executing further opportunities to strengthen Mondi’s cost competitiveness.”He said Mondi remains confident about the long-term growth of sustainable packaging and believes its stronger focus on efficiency, cost control and improving existing operations will help support growth.Shares in the R88.6bn global giant rose by nearly 16% to above R200 after the interim results announcement on Thursday as investors cheered the restructuring efforts. Business Day
