Agricoltura
UPM Financial Statements Release 2018: UPM delivered record earnings in 2018 - in a strong position for 2019
UPM-Kymmene Corporation Financial Statements Release 31 January 2019 at 09:40 EET
"2018 was a record year for UPM. We achieved record earnings and our net debt fell below zero. The year was a commercial success and we succeeded in mitigating higher input costs. We laid the groundwork for future growth in our current and innovative new businesses and received exceptional recognition for our responsibility performance. The results in 2018 demonstrate the impact of many years of transformation and I wish to thank all UPMers and our partners for achieving excellent results together.
Our sales grew by 5% and comparable EBIT increased by 17% in 2018. Our cash flow was strong, and we finished the year with a record low negative net debt of EUR -311 million.
While the uncertainties in the global economy increased towards the end of the year, we delivered a strong fourth quarter. This marked the 23 consecutive quarter of earnings growth. Our sales grew in Q4 by 6% and comparable EBIT increased by 10% to EUR 404 million.
UPM Biorefining had an excellent fourth quarter. Our pulp deliveries resumed growth despite the Pietarsaari mill maintenance shutdown. Biofuels continued to operate on a new level of profitability and production, which was achieved after the Q2 turnaround shutdown.
UPM Communication Papers continued to increase its earnings despite steadily declining market demand and steep increase in variable costs. This shows the result of consistent work for customer commitment, cost efficiency and effective use of assets. Also UPM Energy continued to improve its performance thanks to higher prices, even though hydropower volumes remained very low.
UPM Raflatac resumed sales growth, but its quarter was still impacted by variable cost increases. UPM Plywood enjoyed good demand, but deliveries were unfortunately held back by political strikes in Finland.
UPM Specialty Papers had a disappointing quarter. In the Asian fine paper business, margins continued to be under pressure as destocking in the value chain continued to pressure prices and pulp costs remained high. However, good demand continued in the label paper and release liner businesses. We will focus on measures to restore the profitability of the business.
Looking forward, we are excited about 2019. UPM is in great shape with competitive businesses, aiming higher culture and consistently strong cash flow. Additionally, we have net cash in the balance sheet, which is unforeseen in this industry.
Furthermore, we look forward to our transformative prospects that provide us with unique opportunities for significant long-term earnings growth. In Uruguay, preparations for the potential new world-class pulp mill are proceeding. The implementation of the investment agreement between UPM and the Government of Uruguay is now in an intensive phase, where tangible progress in the infrastructure initiatives is required. In January, we announced that UPM is taking part in the international public tendering process in the port of Montevideo. If the ongoing second preparation phase is concluded successfully, UPM will initiate the company's regular process of analysing and preparing an investment decision on the potential pulp mill project.
In UPM Biochemicals, we are continuing the basic engineering work for the potential first industrial-scale biochemicals refinery in Germany. In UPM Biofuels, we have completed the Environmental Impact Assessment for a possible biofuels refinery in Finland.
UPM's Board of Directors has today proposed a dividend of EUR 1.30 (1.15) per share for 2018, representing an increase of 13% from the previous year and 50% of operating cash flow per share. The proposal, which is above company's long-term dividend policy range of 30-40%, reflects UPM's exceptional financial position and confidence in future cash generation.
Overall, the long-term outlook for our businesses is stronger than ever. It is driven by global megatrends, more sustainable consumer choices and the need to reduce reliance on fossil resources. UPM is ready to grasp the limitless opportunities that bioeconomy offers for value creation and business growth."
The global economic growth is estimated to continue in 2019, albeit at a slower pace than in 2018. There are, however, significant uncertainties related to this, including trade negotiations between China and the US, growth in China, the undefined nature of Brexit and political uncertainties in several countries. These issues may have an impact on the global economic growth and on UPM's product and raw material markets during 2019.
UPM reached record earnings in 2018. UPM's business performance is expected to continue at a good level in 2019.
In 2019, favorable demand is expected to continue for most UPM businesses. Demand decline is expected to continue for UPM Communication Papers.
In the beginning of the year 2019, pulp prices are expected to be lower and graphic paper prices in Europe are expected to be higher than in Q4 2018.
Input costs are expected to stabilise after the significant increases seen in 2018. UPM will continue measures to reduce both variable and fixed costs.
Fair value increases of forest assets are not expected to contribute meaningfully to comparable EBIT in 2019.
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 ensure a timely start of the webcast.
The presentation is available at www.upm.com for 12 months after the call.
Conference call title:
AU: +61 284058549
AT: +43 19287907
CH: +41 225809034
DE: +49 6913803430
ES: +34 935472900
HK: +852 30600225
IN: +91 2261875172
IR: +353 14311252
IT: +39 0236013821
JP: +81 344556492
NL: +31 207095189
SP: +65 64298349
BE: 080029913
DK: +45 35445577
FI: +358981710310
FR: +33 170750711
NO: +47 23500243
SE: +46 856642651
UK: +44 3333000804
US: +1 6319131422
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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
We deliver renewable and responsible solutions and innovate for a future beyond fossils across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers and UPM Plywood. We employ around 19,000 people worldwide and our annual sales are approximately EUR 10.5 billion. Our shares are listed on Nasdaq Helsinki Ltd. UPM Biofore - Beyond fossils. 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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