UPM’s financial performance stable, strong operating cash flow continued

UPM-Kymmene Corporation     Financial statements release 2012        31 January 2013 at 09:45 EET


UPM’s financial performance stable, strong operating cash flow continued

Q4/2012

• Earnings per share excluding special items were EUR 0.19 (0.16), and reported EUR -2.84 (0.20)

• EBITDA was EUR 301 million, 11.4% of sales (301 million, 11.2% of sales)

• Impairment charges of EUR 1,779 million were recorded in the Paper business area

• Operating cash flow continued to be strong at EUR 352 million
 

Q1–Q4/2012

• Earnings per share excluding special items were EUR 0.70 (0.93), and reported EUR -2.39 (0.88)

• EBITDA was EUR 1,269 million, 12.2% of sales (1,383 million, 13.7% of sales)

• Net debt decreased by EUR 582 million to EUR 3,010 million

• Board’s proposal for dividend per share EUR 0.60 (0.60)

Key figures Q4/2012 Q4/2011 Q1–Q4/2012 Q1–Q4/2011
Sales, EURm 2,650 2,686 10,438 10,068
EBITDA, EURm 1) 301 301 1,269 1,383
% of sales 11.4 11.2 12.2 13.7
Operating profit (loss), EURm -1,666 131 -1,350 459
excluding special items, EURm 139 147 530 682
% of sales 5.2 5.5 5.1 6.8
Profit (loss) before tax, EURm -1,697 94 -1,406 417
excluding special items, EURm 116 110 447 572
Net profit (loss) for the period, EURm -1,491 102 -1,254 457
Earnings per share, EUR -2.84 0.20 -2.39 0.88
excluding special items, EUR 0.19 0.16 0.70 0.93
Operating cash flow per share, EUR 0.67 0.59 1.93 1.99
Shareholders’ equity per share at end of period, EUR 11.23 14.22 11.23 14.22
Gearing ratio at end of period, % 51 48 51 48
Net interest-bearing liabilities at end of period, EURm 3,010 3,592 3,010 3,592
  1. 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 comments on the full year 2012:

”In 2012, UPM’s financial position remained stable. The profitability of our businesses continued at similar level as in 2011, UPM EBITDA for the full year was slightly lower, and the operating cash flow remained strong. The Q4 result was well in line with the comparison periods and the cash flow was strong. During the year, we were able to reduce our net debt by EUR 582 million. Considering the volatile economic environment last year, this is a noteworthy achievement.

With respect to our growth businesses, Energy was an outstanding performer. Additionally, Pulp and Label as well as UPM’s paper business in Asia continued to perform well. For Pulp, the decrease in market prices meant a clear decrease in the operating profit, however.

In other businesses, the earnings development was positive in spite of the challenging economic environment.

However, the profitability of the Paper Business Group overall was weak, although healthy cash flow continued. Paper was able to markedly reduce costs and improve its cost structure, but particularly in Europe the decrease in market prices and lower delivery volumes undermined the profit improvement potential of the business.

The imbalance of demand and supply in the European graphic paper markets is tempting some to short-sighted activity. The margins are squeezed to a level which are unsustainable in light of the industry cost structures. We, however, aim to secure our cash flow. Therefore UPM’s restructuring measures of last year and plans of this year are unfortunate but inevitable.

UPM has a strong and versatile business portfolio with profitable businesses which we continue to grow with measured steps. In Paper, we work hard to maintain our strong cash flow. The Board’s dividend proposal of EUR 0.60 indicates confidence in the positive development of UPM’s operative cash flow and earnings.

Although the markets have suffered from uncertainties in the world economy, we made steady steps forward in our Biofore strategy in 2012. Pulp has experienced a very positive development, with growing customer segments and markets. The construction of the Lappeenranta wood-based biodiesel refinery is proceeding according to plan. The uncoated woodfree speciality paper investment in China is also going ahead, while the Label business is growing both in specialty products and in emerging markets .

What is more, our innovation activity has continued and materials efficiency has improved in all of our businesses”, says Pesonen.

Outlook for 2013

Economic growth in Europe is expected to remain very low in the early part of 2013. This will have a negative impact on the European graphic paper markets in particular. The hydrological situation in the Nordic countries is normalising and the forward electricity prices for 2013 are slightly higher than the realised market prices in 2012. Growth market economies are expected to fare better, which is supportive for the global pulp and label materials markets as well as paper markets in Asia and wood products markets outside Europe.

In H1 2013, UPM’s performance will be underpinned by continued stable overall outlook for growth businesses such as energy, pulp and label, as compared to H2 2012. However, slightly lower publication paper prices, adverse currency development and lower delivery volumes are expected to have a clear negative impact on the European paper business profitability, as compared with H2 2012. UPM’s cost level is expected to be stable.

Dividend for 2012

The Board of Directors proposes to the Annual General Meeting, to be held on 4 April 2013, that a dividend of EUR 0,60 per share be paid in respect of the 2012 financial year on 19 April 2013. The dividend will be paid to a shareholder registered in the Company’s shareholders’ register held by Euroclear Finland Ltd on the record date for dividend payment being 9 April 2013.

Conference call and press conference

UPM 's President and CEO Jussi Pesonen will present the results in a conference call and a webcast for analysts and investors, held in English language, on 31 January 2013 at 13:15 EET.

Later in the afternoon, UPM's President and CEO Jussi Pesonen will present the results in a press conference held in Finnish language at UPM Group Head Office in Helsinki (main entrance, Eteläesplanadi 2) on 31 January 2013 , at 14:30 EET.

Conference call 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 Results 2012

Conference ID: 927316


PHONE NUMBERS

PARTICIPANT - CONNECTION DETAILS
 
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Participant - UK: +44 (0)20 7162 0077  

The webcast can be replayed at www.upm.com for 12 months.                      

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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. For more detailed information about risk factors, see pages 103–105 of the company’s annual report 2011.

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UPM leads the way in integrating bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. The company’s business is divided into three business areas: Energy and Pulp, Paper and Engineered Materials. UPM employs approximately 22 000 people and has production plants in 17 countries. The company’s annual turnover amounts to more than EUR 10 billion. UPM's shares are listed on the Helsinki Stock Exchange. UPM – The Biofore Company – www.upm.com

UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President,
Corporate Communications

UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284
media@upm.com
www.upm.com