South Africa’s most valuable packaging company – and the man running it

Mondi is a R140 billion packaging company that was founded in South Africa but now boasts 100 production sites in more than 30 countries. 

While Mondi’s headquarters are now based in Europe, the company traces its roots back to the early 20th century in South Africa. 

What started as a small paper mill in Durban is now a global leader in packaging and paper.

Many may not know that Anglo American, the mining and metals giant, played a significant role in Mondi’s history.

The packaging giant’s history begins before it was founded in the early 1960s with CBI Consulting Engineers, which has played a pivotal role in the design, construction, and expansion of numerous mills and facilities across the country.

Since its inception in 1944, CBI Consulting Engineers has been a cornerstone of the South African pulp and paper industry. 

The company was instrumental in the establishment and growth of several Sappi mills in South Africa.

The Journal for the Technical Association of the Pulp and Paper Industry of Southern Africa (TAPPSA) explained how, in the early 1960s, CBI participated in a feasibility study to utilise wattle in the production of paper. 

However, after several technical partners withdrew, CBI turned to mining giant Anglo American, which was eager to join the project.

In 1967, the two parties, alongside Durban’s City Engineer, located a 40-acre site on the north bank of the Umlaas Canal at Merebank in Durban. It’s there that the Mondi Merebank mill was developed.

Over the next two decades, the mill expanded rapidly, adding several paper machine halls to its infrastructure. A machine hall is an industrial machine used in the pulp and paper industry to create paper in large quantities at high speed.

From the 1990s, Mondi continued to grow locally but also expanded into Europe, acquiring a stake in mills in Austria, Poland, Slovakia, Russia and Bulgaria.

By 2007, Mondi had outgrown its position as an Anglo American subsidiary. 

With the mining giant also looking to narrow its focus on mining, the Mondi Group was demerged from Anglo American and dual-listed on the Johannesburg and London Stock Exchanges.

“The demerger of Mondi represents a major milestone in delivering Anglo American’s restructuring programme in becoming a focused global mining company,” the miner said at the time. 

“Mondi has been successfully built into a leading paper and packaging group and is today well positioned to compete on a global basis.” 

David Hathorn, Mondi’s CEO at the time, said, “The demerger will be a big step forward for Mondi.” 

“Being part of Anglo American has served us well, but the time is right for Mondi to become independent.” 

“We believe that being a separately listed group will create new opportunities and give us added flexibility to take Mondi forward into the next phase of its development.”

This “next phase” consisted of Mondi expanding its reach in Europe, modernising many of its mills, and divesting from businesses that no longer served its interests.

In 2011, Mondi Packaging South Africa was demerged from the group and listed as Mpact on the Johannesburg Stock Exchange. The company is still listed today.

A year later, Mondi made a major acquisition when it bought Nordenia, a multinational manufacturer of flexible packaging, technical films, and product components based in Germany. 

Nearly every year since Mondi made acquisitions that saw the company’s network across Europe expand, and turning the once small Durban mill into a global packaging powerhouse.

However, while Mondi has enjoyed considerable success throughout its history, it has faced significant challenges in recent years.

Like many other companies, the economic downturn resulting from the Covid-19 pandemic hit Mondi hard. It impacted the demand for packaging and paper products, leading to lower sales and revenue.

However, where others benefitted from the economy’s recovery in 2022, Mondi was dealt another blow when the company lost a third of its value due to the then-imminent Russia-Ukraine war. 

The Russian market accounted for a fifth of the company’s profits and had solid growth prospects in the country. 

However, on 15 December 2022, Mondi announced an agreement to sell its three Russian packaging converting operations to the Gotek Group for a total consideration of RUB 1.6 billion.

On 3 July 2023, the manufacturer confirmed that Gotek Group received all requisite approvals, and the sale has now been completed. Mondi received net proceeds of €30.4 million from this disposal into its Austrian bank account.

The three assets that formed part of this deal were smaller businesses, but Mondi also had to divest its most significant facility in Russia, Mondi Syktyvkar, later in 2023.

While Mondi has taken steps to recover from these considerable setbacks, the company is still on the mend.

Recently, the packaging giant had to back out of a deal that would have created one of the world’s largest makers of packaging.

Earlier this year, Bloomberg reported that Mondi agreed to buy DS Smith, a British multinational packaging business headquartered in London, for £5.1 billion.

The all-stock deal had an implied value of 373 pence a share. That’s a 33% premium compared with DS Smith’s price on 7 February 2024, the day before the company said it had received an initial approach from Mondi.

However, in April this year, Mondi announced that, following a period of due diligence and after carefully considering the value the combination with DS Smith would deliver to Mondi’s shareholders, its board has decided that the transaction would not be in the best interests of its shareholders. 

“Accordingly, Mondi does not intend to make an offer for DS Smith,” the company said.

Mondi said its board remains confident that its compelling portfolio of sustainable packaging and paper products, scale and cost-advantaged quality asset base, along with its pipeline of organic investments, ensure it is well-positioned to deliver long-term structural growth in the markets in which it operates.

Andrew King

The man charged with keeping the company afloat during this trying time is Mondi veteran Andrew Charles Wallis King.

King completed articles with Deloitte & Touche in Johannesburg in 1994. In 1995, he joined Minorco, part of Anglo American, as a financial analyst, before assuming responsibility for the group’s investment management activities, and transferring to its corporate finance department in 1998. 

He worked on several group M&A activities before being appointed vice president of Anglo American Corporate Finance in 1999.

He was appointed Mondi’s Vice President of Business Development in 2002 and Corporate Development Director in 2004. 

He served as CFO of Mondi from June 2005 to May 2006. He was then appointed as Group Strategy and Business Development Director before becoming the CFO of the Mondi Group in 2008.

Therefore, King has more than 20 years of experience with Mondi under his belt, which has given him a detailed understanding of the company’s strategy, capital allocation priorities, financial structure and the environment in which the group operates. 

He has played a key role in defining the company’s strategic direction and re-shaping the capital structure since listing. 

When Kind was appointed CEO in April 2020, he was dropped into the frying pan, as the next few years would prove to be some of the company’s most challenging.

During his relatively short five-year tenure, Kind has had to navigate Mondi through the Covid-19 pandemic and the Russia-Ukraine war.

However, his long and varied experience at the company served him and Mondi well, as King was up to the task and managed to keep the company afloat while many others fell.

While Mondi is still recovering from the hits it took over the past five years, King recently said he is optimistic about the company’s future.

Following the fallout of the DS Smith deal, King told investors that Mondi is upbeat about its future prospects.

Contributing to this optimism were increased sales volumes and improved market conditions in the first quarter of 2024. This allowed Mondi to meet its profit projections for the start of 2024.

King added that Mondi has a “full pipeline” of internal expansion as it pursues a €1.2 billion organic growth spend that is expected to be 80% complete by the end of 2024. 

King said this investment is expected to reap benefits going into 2025.

The company is also benefiting from structural trends, such as the shift towards sustainable paper packaging in eCommerce.