Outlook for 2012
Global economic growth is expected to continue in 2012. In Europe, however, economic growth is weak and uncertainty persists.
In UPM’s businesses, market conditions have stabilised in the early part of 2012, after deteriorating during the second half of 2011. The short term demand and price outlook for UPM’s products is broadly stable in Q2 2012 compared to Q1 2012, taking into account seasonal variations.
UPM’s cost level decreased in Q1 2012 and is expected to stay broadly on the same level during Q2 2012. Variable costs are expected to start increasing later during the year. The realisation of the Myllykoski cost synergies is expected to continue as planned, and more than EUR 100 million cost synergies are expected to contribute to UPM’s full-year 2012 results.
Operating profit excluding special items in the first half of 2012 is expected to be slightly higher than in the second half of 2011. Earlier, UPM expected its operating profit in the first half of 2012 to be at around the same level as in the second half of 2011.
Capital expenditure for 2012 is forecast to be around EUR 350 million.
UPM’s hydropower generation volume is expected to continue at a relatively good rate in the early part of the year. UPM’s average electricity sales price in Q2 2012 is expected to be lower than in Q1 2012 due to seasonal variations.
Chemical pulp deliveries in Q2 2012 are expected to decrease somewhat from the high level in Q1 2012. The average price of UPM’s pulp deliveries is estimated to be slightly higher in Q2 2012 than in Q1 2012.
In the sawn timber business, delivery volumes are expected improve seasonally in Q2 2012 from Q1 2012.
Graphic paper demand in Europe is expected to continue to be somewhat lower than last year. Solid demand is expected to continue in Asia. UPM’s paper deliveries are expected to increase seasonally somewhat in Q2 2012 from Q1 2012. The average price of UPM’s paper deliveries in euros is expected to be at about the same level in Q2 2012 as in Q1 2012.
Label materials deliveries are expected to be at about the same level in Q2 2012 as in Q1 2012. Sales prices in local currencies and variable costs are expected to be stable in Q2 2012 compared with Q1 2012.
Plywood deliveries are expected to increase somewhat in Q2 2012 from Q1 2012. Sales prices are expected to increase slightly for spruce plywood from Q1 2012.