- Packaging company Mondi announced it has scrapped its final dividend for the year ended 31 December 2019 on Covid-19 uncertainty, as first quarter underlying EBITDA declined.

In a trading update for the period since the end of last year, the group reported underlying EBITDA of €385m was 18% below the comparable prior year period of €471m, driven mainly by lower pricing across its key paper grades mitigated by lower input cost and ongoing cost reduction programmes, but in line with underlying EBITDA of €381m in the fourth quarter of 2019.

Mondi reported that it has taken downtime at its Neusiedler mill in Austria to manage inventory levels, while it has temporarily stopped production at its Merebank mill in South Africa, which has 270,000 tonnes of annual production capacity, in line with government regulations.

With the exception of those closures, Mondi confirmed that all its facilities have been in operation throughout the period but said that the potential impacts of Covid-19 remained 'very unclear and the pace of change means any effect on operations and the group's financial performance for the year are difficult to predict'.

Group chief executive Andrew King said: 'We delivered a robust performance in the first quarter and in this regard my thanks go to all our colleagues for their courage and commitment during these challenging times.

'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.'

The group has postponed non-essential capital expenditure and slowed down some of its major capital projects, which means that it now expects capital expenditure of around €600m in 2020, down from its previously forecast €700m to €800m.

Mondi said its board will consider the appropriateness of an additional interim dividend payment relating to the financial year ended 31 December 2019 'when it has a clearer view of the effects of COVID-19 on the business and outlook'.

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