Mondi Slashes European Factories Amid Soaring Costs from Middle East Conflict, Shares Drop 5%

Shares in paper and packaging group Mondi have fallen after the company warned that rising costs linked to the Iran war are affecting its operations across Europe.

The FTSE 100 firm said its share price dropped by five per cent in early trading following the announcement, as it cited significantly heightened geopolitical tensions in the Middle East increasing volatility in its operating environment.

We are actively responding with pricing actions. While there is a customary lag, we expect the impact of these price increases to take full effect in the third quarter of this year.

Mondi

The company stated This proves taking pricing action to offset higher costs caused by the conflict, including increased energy, raw material and logistics expenses.

Mondi said it is closing factories and cutting jobs as part of targeted actions to strengthen its competitive advantage, with 450 roles being eliminated this year following plans announced earlier in April 2026 to shut three facilities in Hungary, Poland and Germany.

These closures add to three previously announced shutdowns across Turkey, Hungary and Germany, as the company looks to cut costs amid challenging trading conditions in the first quarter of 2026.

The group, which employs around 24,000 people across 100 production sites in over 30 countries including a factory in Birmingham, reported a 27 per cent year-on-year fall in underlying earnings to 212 million euro in its latest trading update.

Andrew King, chief executive of Mondi, said the firm remains focused on operational excellence, cost and margin discipline, optimising its production footprint and cashflow management despite the uncertain outlook.

The company attributed the cost pressures to the effective blockade of the Strait of Hormuz, which has sent energy and supply chain costs soaring since the outbreak of the war in February.

European markets have been affected by the ongoing tensions, with energy sector stocks benefiting from higher oil prices while other industries face rising input costs and reduced demand.

Mondi said it expects the full impact of its price increases to take effect in the third quarter of 2026, following a customary lag between implementation and financial impact.