UPM-Kymmene Corporation Interim Report 26 April 2018 at 09:40 EET
UPM Interim Report Q1/2018:
UPM continues to grow earningsStrong customer demand in all businesses
Q1 2018 highlights
Jussi Pesonen, President and CEO, comments on Q1 results:
"Commercially the first quarter was excellent. Customer demand was strong and we succeeded in increasing sales prices in all businesses, practically in all products. With this we were able to expand our margins and recover the impact of clearly higher input costs.
Our comparable EBIT increased by 17% to EUR 355 million, marking the 20th consecutive quarter of earnings growth. Operating cash flow was at EUR 208 million and net debt decreased to EUR 41 million during the quarter.
UPM Biorefining benefitted from significantly higher pulp prices in the first quarter. Operationally, however, the quarter left room for improvement. Challenges in wood harvesting and operational efficiency limited our production and we were not able to fully benefit from the strong market demand.
UPM Energy achieved an excellent result with higher electricity prices and a good level of hydropower generation.
UPM Communication Papers (formerly UPM Paper ENA), UPM Specialty Papers and UPM Plywood continued good performance. They were able to offset most of the heavy cost increases with sales price actions in favourable customer demand and tight markets.
The market demand was also good for self-adhesive labels. UPM Raflatac was able to restore its unit margins with price increases after 12 months of continued heavy input cost increases, but gave up some volumes in the process.
We are making progress in our transformative prospects. In Uruguay, the second preparation phase for the potential new pulp mill is proceeding. The permitting processes for the mill, rail and port, as well as rail tendering have started as agreed with the Government of Uruguay.
In UPM Biochemicals, the basic engineering work for the potential industrial scale biochemical refinery in Germany is proceeding at full speed. Results are expected by the end of the year.
In UPM Biofuels, we continue to explore future opportunities by carrying out an environmental impact study in Kotka, Finland, as a potential location for a new biorefinery.
I am pleased to say that UPM is in good shape. Global megatrends drive demand growth for sustainable and safe solutions that we provide. We will create value by seizing the limitless opportunities of bioeconomy."
Outlook for 2018
UPM reached record earnings in 2017 and its comparable EBIT is expected to increase further in 2018 compared with 2017.
The fundamentals for UPM businesses in 2018 continue to be favourable. Healthy demand growth is expected to continue for most UPM businesses in 2018, while demand decline is expected to continue for UPM Communication Papers. Sales prices are expected to be higher in UPM businesses in 2018 compared with 2017.
Input costs are expected to be higher in 2018 compared with 2017. In order to mitigate this, UPM will continue to implement measures to reduce fixed and variable costs. 2018 has started with less favourable currency exchange rates than 2017.
Q2 2018 results will be impacted by significant maintenance activity, especially in UPM Biorefining.
Webcast and press conference
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.
Webcast and conference call details:
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: UPM Interim Report for January - March 2018
Direct telephone numbers:
BE: +3224040635DK: +45 823 331 78FI: +358981710495UK: +442031940552SE: +46856642702US: +18557161597NO: +4723500211FR: +33170750725
International telephone numbers with a pin code 20657817#
AU: +61 29253 5844AT: +43 19282 258CH: +41 44580 0083CN: +86 400 681 5421DE: +49 030 221 510 067ES: +34 911 143 608HK: +852 3068 9834IN: 0018038524634 (Toll Free)IR: +353 1696 8154IT: +39 2 3604 6798JP: +81 3 4455 9554NL: +31 20 716 8427SP: +65 6307 7610
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.
UPM-Kymmene CorporationPirkko HarrelaExecutive Vice President, Stakeholder Relations
UPM, Media Relations Mon-Fri 9:00-16:00 EETtel. +358 40 588 3284 firstname.lastname@example.org
UPMUPM leads the forest-based bioindustry into a sustainable, innovation-driven and exciting future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers and UPM Plywood. UPM provides sustainable and safe solutions to the growing global consumer demand. Products are made of renewable and recyclable materials. The group employs around 19,100 people worldwide and its annual sales are approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM - The Biofore Company - www.upm.com
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UPM 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.
UPM Interim Report Q1 2018