UPM-Kymmene Corporation Stock exchange release 25 October 2012 at 9.35 EET
EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets, excluding the share of results of associated companies and joint ventures, and special items.
Jussi Pesonen, President and CEO, comments on the result:
“UPM’s business environment in the third quarter of 2012 was impacted by the decelerating global economy. Despite these circumstances, I am pleased that our cash flow continued to be strong and we were able to decrease our net debt and further strengthen our balance sheet. Performance in our growth businesses remained good, but Paper, Plywood and Timber continued to suffer from weak profitability. The Group’s operating profit excluding special items was EUR 122 million (Q2 2012 EUR 118 million or Q3 2011 EUR 136 million).
Energy, Label and Asian Paper businesses maintained strong profitability during the third quarter. Ample hydropower boosted Energy’s performance and Label experienced positive cost development. Pulp profitability was affected by temporary process disruptions at the Pietarsaari mill.
Although both deliveries and prices in Paper were in line with expectations, we were not able to adjust Paper’s cost level enough to improve profitability in the current operating environment. The development of the logistics and energy costs in particular was disappointing. The sale of the packaging paper business also affected the business’ EBITDA.
We will use our full toolkit to get Paper’s performance on the right track. Our main focus in the Paper business is to improve margins to maximise cash flow. We have already started to review our costs, margins and structures to make the necessary turnaround in Paper and we have informed our publication paper customers of price increases. We will also investigate consolidation opportunities, and carry out restructuring and capacity closures when needed.
Meanwhile, we have continued the consistent implementation of the strategic actions in our growth businesses. In Label we completed the acquisition of Gascogne Laminates operations in Switzerland, following the strategy to grow in special labelstock products. Construction of the Lappeenranta wood-based biodiesel refinery, as well as preparations for the woodfree speciality paper machine investment in China are proceeding as planned,” Pesonen concludes.
Outlook for 2012
Global economic growth has slowed down during 2012. The European economy is expected to be in recession in the second half of 2012. There are considerable uncertainties related to both to the European sovereign debt problems and to the growth prospects of the Chinese and other emerging economies.
In Q4 2012, UPM’s operating profit excluding special items is expected to be about the same, or lower than in Q3 2012. Operating profit excluding special items for the full year 2012 is expected to be lower than in 2011.
UPM’s cost level is expected to remain stable in Q4 2012 compared with Q3 2012. The realisation of the Myllykoski cost synergies is expected to continue as planned, and cost synergies of more than EUR 150 million are expected to impact UPM’s full-year 2012 results.
Capital expenditure for 2012 is forecast to be approximately EUR 350 million.
The full outlook is available in the Interim report.
For more information, please contact:
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001
Mr Tapio Korpeinen, CFO, UPM, tel. +358 204 15 0004
Webcast and press conference:
UPM's President and CEO Jussi Pesonen will present the Interim Report in a conference call and webcast for analysts and investors, held in English language, on 25 October at 13:00 Finnish time (11:00 BST, 06:00 EDT).
Later in the afternoon, UPM's President and CEO Jussi Pesonen will present the Interim Report in a press conference held in Finnish language at UPM Group Head Office in Helsinki (main entrance, Eteläesplanadi 2) on 25 October, at 14:15 Finnish time (12:15 BST, 07:15 EDT).
Conference call and webcast details:
The conference call can be participated either by dialing a number in the list below or following the webcast online at www.upm.com. 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 dialing in 5-10 minutes prior to ensure a timely start to the conference.
Conference call title:
UPM-Kymmene Corporation Interim Report January-September 2012
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Participant - Switzerland (Zurich): +41 (0)434 5692 61
Participant - UK: +44 (0)20 7162 0077
The webcast can be replayed at www.upm.com for 12 months.
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. For more detailed information about risk factors, see pages 103–105 of the company’s annual report 2011.
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, Corporate Communications
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