​​​​​​​​​​​​​​​​​Summary of latest financial results

Financial Statements Release 2017:
Excellent finish to the record-strong year 2017

Q4 2017 highlights

  • Comparable EBIT increased by 29% to EUR 366 million (283 million in Q4 2016).
  • Sales prices and delivery growth boosted earnings, outstripping the impact of higher input costs and unfavourable currencies.
  • Strong operating cash flow at EUR 407 million (405 million).
  • Net debt decreased to EUR 174 million (1,131 million).
  • UPM and the Government of Uruguay signed an agreement on local prerequisites for a possible new pulp mill.
  • UPM announced the next step towards entering a new sustainable biochemicals business.
  • UPM announced a new growth project at the UPM Chudovo plywood mill in Russia.
  • UPM closed graphic paper capacity in the US and announced plans to optimise operations in Germany.
  • UPM Kymi pulp mill expansion and the UPM Raflatac expansion in Poland were completed.

2017 highlights

  • Comparable EBIT increased by 13% to EUR 1,292 million (1,143 million in 2016).
  • Strong profit performance continued through a turn in input cost environment.
  • Higher delivery volumes contributed to the comparable EBIT growth.
  • Strong operating cash flow at EUR 1,558 million (1,686 million).
  • The Board proposes a dividend of EUR 1.15 (0.95) per share, representing 39% of operating cash flow per share.
  • UPM started focused growth investments at the Kaukas pulp mill and the Tampere label stock factory.
  • UPM divested UPM Paper ENA's hydropower assets in Germany, Austria and the US.
  • UPM closed a total of 433,000 tonnes of graphic paper capacity during 2017, targeting total annual cost savings of EUR 60 million.
Key figures Q4/2017 Q4/2016 Q3/2017 Q1-Q4/2017 Q1-Q4/2016
Sales, EURm 2,571 2,476 2,493 10,010 9,812
Comparable EBITDA, EURm 451 349 425 1,631 1,560
  % of sales 17.5 14.1 17.1 16.3 15.9
Operating profit, EURm 299 232 379 1,259 1,135
Comparable EBIT, EURm 366 283 351 1,292 1,143
  % of sales 14.2 11.4 14.1 12.9 11.6
Profit before tax, EURm 273 231 357 1,186 1,080
  Comparable profit before tax, EURm 340 282 328 1,218 1,089
Profit for the period, EURm 244 187 286 974 880
Comparable profit for the period, EURm 297 220 267 1,004 879
Earnings per share (EPS), EUR 0.46 0.35 0.54 1.82 1.65
  Comparable EPS, EUR 0.56 0.41 0.50 1.88 1.65
Return on equity (ROE), % 11.5 9.3 13.9 11.5 10.9
Comparable ROE, % 14.0 10.9 13.0 11.9 10.9
Return on capital employed (ROCE), % 13.2 9.4 14.8 12.5 10.5
Comparable ROCE, % 15.9 11.4 13.6 12.8 10.6
Operating cash flow, EURm 407 405 486 1,558 1,686
Operating cash flow per share, EUR 0.76 0.76 0.91 2.92 3.16
Equity per share at end of period, EUR 16.24 15.43 15.61 16.24 15.43
Capital employed at the end of period, EURm 9,777 10,657 10,098 9,777 10,657
Net debt at the end of period, EURm 174 1,131 623 174 1,131
Net debt to EBITDA (last 12 m.) 0.11 0.73 0.41 0.11 0.73
Personnel at the end of period 19,111 19,310 19,335 19,111 19,310


​  Jussi Pesonen, President and CEO, comments on Q4 
and full year 2017 results:

Excellent finish to the record-strong year 2017

"2017 was a record year and its last quarter was our 19th consecutive quarter of earnings growth. This was the result of favourable market conditions, timely growth investments and successful mitigation of input cost increases. Once again, our business model, performance culture and capex effectiveness delivered excellent results.
Our comparable EBIT in 2017 grew by 13%. Our cash flow was consistently strong, and we reduced our net debt by EUR 957 million over the course of the year, ending at a record low of EUR 174 million.
We finished the year with an excellent fourth quarter. We were able to increase prices and achieve good growth in delivery volumes, which in this quarter outstripped the impact of higher input costs and unfavourable currencies. Our comparable EBIT in Q4 increased by 29% to EUR 366 million. 
UPM Biorefining benefitted from higher pulp prices and good delivery growth during the quarter. Kaukas, Pietarsaari and Fray Bentos pulp mills and the Lappeenranta biorefinery all set records for annual production. UPM Raflatac, UPM Specialty Papers and UPM Plywood were able to offset higher input costs by increasing deliveries and sales prices. At UPM Energy, the hydropower generation recovered to above normal level. UPM Paper ENA also reported a strong end to the year, despite rising fibre costs.
Since the introduction of UPM business model in 2013, we have achieved a clear improvement in business performance, attractive returns for our growth investments and a truly industry-leading balance sheet. Today we are proud to have six strong business areas, which provide us with a wealth of future opportunities. 
Going forward we will maintain our performance focus supported by continuous improvement culture and innovation. We will also continue to grow our businesses with attractive focused growth investments. Today we announced the latest news on UPM Specialty Papers' growth plans. 
Furthermore, we are now well-positioned for transformative prospects. I am pleased that we have reached a cornerstone agreement with the Government of Uruguay, outlining the local prerequisites for a potential pulp mill investment. The infrastructure projects and the pre-engineering of the mill are in progress. For UPM's pulp business, the potential mill would imply a step change in business size and earnings. 
Another opportunity for transformation comes with the emerging biomolecules businesses, biofuels and biochemicals. During the fourth quarter, we started a basic engineering study regarding a potential industrial scale biochemical refinery in Germany. Entering the biochemicals business could provide UPM with significant growth platform for decades to come.
Our objective is earnings growth and therefore, we will maintain our high standards when it comes to return requirements for growth investments.
UPM is in better standing than ever: in the coming years we can allocate more capital to growing and transforming the company while simultaneously increasing the distribution to our shareholders and maintaining headroom in our strong balance sheet. Today, UPM's Board of Directors has proposed a dividend of EUR 1.15 (0.95) per share for 2017, representing 39% of operating cash flow per share and up by 21% from last year.
All in all, UPM is well-positioned for 2018 and beyond. UPM businesses today and in the future provide sustainable and safe solutions for the growing global consumer demand. Bioeconomy offers us limitless opportunities for value creation and growth."

Outlook for 2018

UPM reached record earnings in 2017. Fundamentals for UPM businesses in 2018 continue to be favourable.
Healthy demand growth is expected to continue for most of UPM's businesses in 2018, while modest demand decline is expected to continue for UPM Paper ENA. Sales prices are expected to increase in most of UPM's businesses, compared with 2017.
Input costs are expected to continue increasing in 2018, compared with 2017. UPM will continue measures to reduce fixed and variable costs to mitigate this. 2018 starts with less favourable currencies than 2017.
Q1 2018 results are expected to be impacted by temporary wood harvesting limitations in Northern Europe caused by unusually warm and wet weather in late 2017 and the beginning of 2018.

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