Mondi has stated that it will take pricing actions as “significantly heightened” geopolitical tensions in the Middle East have increased volatility in what it described as an already complex operating environment.

The FTSE 100 sustainable packaging and paper firm said that with a limited direct exposure to the region, it has experienced increased energy, raw material and logistics costs.

Mondi said it is actively responding with pricing actions, and while there is a customary lag, it expects the impact of these price increase to take full effect in Q3.

The firm stated that while its corrugated packaging and flexible packaging business units increased sales volumes across its range of paper grades, this was offset by lower average selling prices, and towards the end of the quarter, higher energy-related input costs.

In Q1, the company reported that its earnings decreased from €214m in Q4 2025 to €212m.

Mondi said it will continue to take targeted actions and cash flow optimisation remains a priority, supported by disciplined control of capital expenditure and “rigorous working capital management”.

Chief executive officer at Mondi Group, Andrew King, stated: "Against a backdrop of challenging market conditions, sales volumes increased, although lower selling prices and latterly, cost pressures linked to escalating geopolitical tensions, weighed on underlying EBITDA.

"These pressures persist into the second quarter and we are taking pricing actions to mitigate their impact. While there is an inherent time lag, we expect these measures to take full effect in the third quarter.

"Despite the uncertain outlook, we continue to focus on what we can control — driving operational excellence, rigorous cost and margin discipline, optimising our production footprint and focused cashflow management. These actions underpin our confidence in our ability to navigate the current headwinds and continue to deliver our high-quality range of sustainable packaging and paper products for our customers."

Following the update, shares in Mondi fell by over 8%.

Investment director at AJ Bell, Russ Mould, said there is "no papering over the cracks" in the firm’s latest update.

He concluded: "Mondi is increasing its prices but cannot pass on costs overnight so investors won’t see evidence of this until later in the year. Management can take some credit for an increase in volumes which suggests Mondi is making progress on items within its compass to control.

"Around the turn of the last decade a combination of the burgeoning ESG theme – where packaging firms like Mondi were popular picks thanks to their recycling efforts – and the e-commerce boom seen during the pandemic saw the share price hit heights which feel very distant today.

"Mondi is now down more than 60% over the last five years as demand has eased back and the company has battled waves of inflationary pressure. The immediate outlook suggests Mondi will have to run hard just to stand still."

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