Agricoltura
UPM Half Year Financial Report 2018: Commercial success drives growth in sales and earnings - strong outlook for H2 2018
UPM-Kymmene Corporation Half year financial report 24 July 2018 at 09:30 EET
"UPM delivered yet another successful quarter of earnings growth. Customer demand for our products continued to be strong and we succeeded in increasing prices in most of our businesses also during the quarter. This enabled us to expand our margins and recover the impact of clearly higher input costs.
We carried out several significant scheduled maintenance shutdowns during the quarter, which held back our operating profit by approximately EUR 90 million. However, earlier challenges in wood harvesting and logistics were solved and no longer impacted our performance.
Our sales grew by 5% and our comparable EBIT increased by 24% to EUR 334 million. Operating cash flow was strong at EUR 329 million. UPM paid a dividend of EUR 613 million and net debt was EUR 401 million at the end of the quarter.
UPM Biorefining increased its earnings clearly. Customer demand was strong for pulp, biofuels and sawn timber, and sales prices increased. Scheduled maintenance shutdowns were carried out at the Fray Bentos and Kaukas pulp mills and at the Lappeenranta biorefinery. During the Kaukas shutdown, the pulp mill expansion was completed, providing 30,000 tons of additional pulp capacity.
UPM Communication Papers grew both its sales and earnings in tight markets. The business area achieved high operational efficiency and increased prices. UPM Raflatac performed well and managed to resume earnings growth after a challenging Q1. UPM Plywood had a steady performance in a good market situation.
UPM Energy improved earnings due to higher electricity prices and volumes. Electricity generation was held back by the annual maintenance shutdown at Olkiluoto power plant and weakened hydropower availability during the quarter.
UPM Specialty Papers enjoyed good market demand and increased prices, but was not able to fully offset the higher pulp costs.
We look to the future with confidence. In the second half of the year we have every opportunity to respond to customer demand with growing deliveries. Our ongoing focused growth projects enable us to develop our market position while maintaining and growing our earnings. During the quarter we announced new focused growth investments in Germany and in China in the attractive release liner business.
Our transformative prospects provide us with unique and exciting opportunities for significant long-term earnings growth. In Uruguay, the second preparation phase for the potential new world-class pulp mill is proceeding well. In attractive biomolecular businesses we continue to prepare for the potential first industrial-scale biochemical refinery in Germany and study the potential biofuels scale up in Finland.
In 2009, we redefined UPM as the Biofore Company, creating a new, future-oriented industry category characterized by efficiency, innovation and sustainability. This positioning gave a name to our transformation, energizing both UPMers as well as our stakeholders. We continue to be inspired by the limitless opportunities of bioeconomy. We are committed to delivering renewable and responsible solutions and innovating for a future beyond fossils."
UPM's comparable EBIT is expected to continue growing in 2018 compared with 2017. H2 2018 comparable EBIT is expected to be significantly higher compared with H1 2018.
The fundamentals for UPM businesses in 2018 are favourable. Sales price increases in 2018 are expected to outweigh the increase in variable cost, compared with 2017.
H1 2018 results were impacted by four significant maintenance shutdowns and weather-related wood harvesting limitations. H2 2018 is scheduled to have one significant maintenance shutdown.
UPM's President and CEO Jussi Pesonen will present the financial results in a webcast and a conference call for analysts and investors, held in English language, today at 13:15 EET.
Later in the afternoon, Jussi Pesonen will present the results in a press conference held in Finnish language at the UPM Group Head Office (The Biofore House) in Helsinki, Alvar Aallon katu 1, at 14:30 EET.
The conference call can be participated in either by dialling a number in the list below or following the webcast online at www.upm.com or through this link.
Only participants who wish to ask questions in the conference call need to dial in. All participants can view the webcast presentation online. We recommend that participants start dialling in 5-10 minutes prior to the event in order to ensure a timely start of the webcast.
The presentation is available at www.upm.com for 12 months after the call.
Conference call title:
BE: +3224040635
DK: +45 823 331 78
FI: +358981710495
UK: +442031940552
SE: +46856642702
US: +18557161597
NO: +4723500211
FR: +33170750725
AU: +61 29253 5844
AT: +43 19282 258
CH: +41 44580 0083
CN: +86 400 681 5421
DE: +49 030 221 510 067
ES: +34 911 143 608
HK: +852 3068 9834
IN: 0018038524634 (Toll Free)
IR: +353 1696 8154
IT: +39 2 3604 6798
JP: +81 3 4455 9554
NL: +31 20 716 8427
SP: +65 6307 7610
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It should be noted that certain statements herein, which are not historical facts, including, without limitation, those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by "believes", "expects", "anticipates", "foresees", or similar expressions, are forward-looking statements. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein including the availability and cost of production inputs, continued success of product development, acceptance of new products or services by the Group's targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group's patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group's products and the pricing pressures thereto, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group's principal geographic markets or fluctuations in exchange and interest rates. The main earnings sensitivities and the group's cost structure are presented on page 123 of the 2017 Annual Report. Risks and opportunities are discussed on pages 22-23 and risks and risk management are presented on pages 102-104 of the report.
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UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations
Mon-Fri 9:00-16:00 EET
tel. +358 40 588 3284
media@upm.com
UPM leads the forest-based bioindustry into a sustainable, innovation-driven and exciting future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers and UPM Plywood. UPM provides sustainable and safe solutions to the growing global consumption. Products are made of renewable and recyclable materials. The group employs around 19,100 people worldwide and its annual sales are approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM - The Biofore Company - www.upm.com
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presents certain performance measures of performance, financial position and cash flows, which are alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definitions of alternative performance measures are presented in notes to the consolidated financial statements in UPM Annual Report.
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