Amcor Limited and Bemis Company, Inc. announce another important step toward closing their all-stock transaction. Unconditional antitrust clearance with no remedial action has been received from the Brazilian Administrative Council for Economic Defense (CADE). The transaction remains subject to regulatory approval in the United States. The companies are in advanced discussions with US Department of Justice (DOJ) which includes the potential for required remedies. Inclusive of remedies required by the European Commission, collective potential remedies would represent an immaterial proportion of the total sales for the combined company and would not impact the USD 180 million of net cost synergies expected to be delivered by the end of the third year following completion. As previously announced, completion of the transaction is expected on 15th May 2019.
As outlined in our half-year results, demand in the third quarter remained generally softer across the markets in which we operate and prices for key paper grades were below those of the first half. Consequently, underlying EBITDA for the third quarter of 2019 was €383 million, down 18% on the comparable prior year period (€466 million) and 9% below the second quarter of 2019 (€423 million). Lower average selling prices from the highs reached towards the end of 2018 and into early 2019, coupled with the anticipated lower forestry fair value gain, more than offset the benefits of our ongoing profit improvement initiatives.
Like-for-like sales volumes were, on average, marginally lower than the comparable prior year period as a result of lower industrial bags and uncoated fine paper volumes; this was partly offset by growth in corrugated packaging. On average, costs were higher than the comparable prior year period, although lower than the previous quarter.
Planned mill maintenance shuts during the quarter had an estimated impact on underlying EBITDA of around €40 million (2018: €30 million). Based on prevailing market prices, we continue to estimate that the impact of planned mill maintenance shuts on underlying EBITDA for 2019 will be around €150 million (2018: €110 million).
We continue to make good progress on our previously announced major capital investment projects at our high-quality, cost-advantaged operations in central Europe.
Business unit overview
In Fibre Packaging, containerboard markets showed signs of stabilising during the quarter following the sharp price erosion seen in the first half of the year. While average benchmark European containerboard selling prices were lower than the previous quarter and significantly lower than the comparable prior year period, the price movement during the period was limited. Corrugated packaging saw good volume growth during the period and continues to benefit from an innovative product offering and lower input paper costs.
Sack kraft paper demand was generally weaker during the quarter, in particular in export markets, impacting both pricing and volumes. Demand for speciality kraft paper remains good, supported by the drive to replace plastic carrier bags with paper-based alternatives and increasing requirements for sustainable paper-based flexible packaging. In line with expectations, price reductions in selected kraft paper grades became effective at the beginning of the quarter, although pricing remained above 2018 levels. We have taken downtime at certain operations in order to manage our inventory levels in response to softer demand. Industrial bags volumes were lower than in the comparable prior year period, however we have seen an improvement in order books over the past six weeks.
On 30 September 2019 we completed the sale of a specialised extrusion coated products plant in Duffel (Belgium).
Consumer Packaging made steady progress, benefiting from product innovation and continuous improvement initiatives. We are actively working with our customers, suppliers and other stakeholders to find innovative solutions that improve the sustainability of plastic packaging, based on circular economy principles, leveraging our product know-how and customer relationships across our packaging businesses.
In Uncoated Fine Paper, compared to the previous quarter, we saw lower average uncoated fine paper prices, significantly lower pulp selling prices and, as anticipated, a materially lower forestry fair value gain. Strong cost control and shorter planned maintenance shuts could only partly offset these pressures.
more at: https://www.mondigroup.com/media/11187/mondi-trading-update-q3-19-vfinal.pdf