Mondi vs Smurfit Kappa: how to pick a packaging winner

Cardboard acquired an unlikely lustre during the pandemic. Supernormal demand and rising prices caused packagers’ profits to surge in 2021, and growth continued into 2022 even as volumes slipped. Now, however, the dynamics have reversed. Customers are destocking, falling input costs are translating into lower prices, and the FTSE 100 box makers are lamenting the uncertain economic backdrop.

Meanwhile, containerboard prices appeared to hit a trough in the second quarter of 2023, and Jefferies said there was a chance of a “small hike” in prices by the end of the year, which would be good news for the whole sector.

Mondi isn’t out of the woods yet, however. For starters, unlike its two main rivals, it doesn’t just make cardboard. It also sells flexible plastic packaging, which has a longer, knottier supply chain.

Perhaps more importantly, however, it is still trying to shift a sizable Russian business. Mondi has managed to offload three Russian converting plants since the war with Ukraine broke out, but efforts to sell a huge mill in Syktyvkar have fallen apart.