Mondi scraps dividend and cuts spending due to Covid-19 worries
The group intended to spend as much as €800m (R15.8bn) in 2020 but wants to reduce contractors at its sites and preserve cash
Paper and packaging group Mondi intends to save about R9.3bn by cutting capital expenditure and holding on to its 2019 dividend as it battles with the economic uncertainty from the Covid-19 pandemic.
The group will delay planned plant maintenance until the second half of the year, and will cut spending on capital projects by as much as €200m (R3.9bn) during 2020, it said in an update on Thursday.
After a robust first quarter, the group reported a deterioration in its order book in Europe and SA from the beginning of April, as countries began implementing lockdown measures.
The group spent €757m in its 2019 year on capital expenditure, and had expected to spend between €700m and €800m in 2020. — but has now reduced this to €600m.
The group’s board has also decided not to put a decision on dividends to its annual general meeting in May. Its board had previously recommended a final dividend of 55.72 euro cents per share (about R11) for its year to end-December — which would have seen the group pay about R5.3bn to shareholders.
Mondi said it had a strong balance sheet, with about €1.5bn (R29.7bn) available, including €800m in cash and €705m in undrawn debt facilities.
“The group is financially strong with a robust liquidity position and capital structure. However, in these unprecedented times we are taking appropriate actions to ensure we remain well-placed to withstand an extended period of uncertainty,” CEO Andrew King said.