Packaging firm Mondi scraps dividend as lockdowns hit order book

(Reuters) - Paper and packaging firm Mondi <MNDI.L> will not pay a final dividend for 2019, it said on Thursday, as it cuts costs and capital spending after seeing a deterioration in its order book in Europe and South Africa from the end of March.

Mondi's flexible packaging division, which makes paper bags and kraft paper used for industrial packaging, saw weaker trading in building and construction industries, and improvement in food, beverage and personal care sectors, it said.

"The potential impacts of COVID-19 remain 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," the company said in a statement.

Mondi, which makes container boards, pulp and corrugated boxes, said it had temporarily stopped production at its Merebank mill in South Africa and its Neusiedler mill in Austria as demand had slumped due to the coronavirus lockdowns.

The FTSE 100 company, which raised 750 million euros ($814.80 million) in bonds earlier this month, said it had access to 1.5 billion euros of liquidity.

Peer DS Smith <SMDS.L> also said on Wednesday it would not pay interim dividend.

($1 = 0.9205 euros)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Saumyadeb Chakrabarty and Vinay Dwivedi)