Mondi has seen its share price fall to a 12-year low after publishing an update that stated that challenging trading conditions are expected to persist for the remainder of the year.

The FTSE 100 packaging firm saw its share price slip by over 16% after reporting an 18% fall in EBITDA to €223m, citing subdued demand and a decline in paper sale prices.

As a result, Mondi has had to extend certain annual maintenance shuts to mitigate the impact of the softer markets.

It added that its EBITDA was lower than Q2 in both its corrugated and flexible packaging businesses.

Chief executive officer at Mondi, Andrew King said that the group remains "relentlessly focused on managing the controllables".

He added: "We have sharpened our emphasis on margin management, rigorous cost optimisation and continuous improvement. These initiatives enable us to navigate current headwinds, build a stronger, more efficient operating platform and drive free cash flow. This will protect value today and deliver enhanced returns when market conditions improve."

In its outlook, Mondi stated that it remains confident in the long-term growth fundamentals of its packaging businesses, and that it is "well placed to capture future growth" and deliver value for shareholders.

Head of markets at AJ Bell, Dan Coatsworth, described packaging companies as economic bellwethers and that a weakening economy often leads to reduced demand for goods.

He concluded: "Mondi has issued a shocker of a trading update, causing its share price to slump and hit a 12-year low. It says trading conditions remain challenging thanks to subdued demand and a decline in paper selling prices.

"Mondi is well versed to operating in a cyclical market and there are a few levers it can pull, such as extending maintenance shutdowns. However, investors are clearly worried about the bigger picture and whether we’re in for a sustained period of weakness."

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