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

UPM Half Year Financial Report 2018:
Commercial success drives growth in sales and earnings 
– strong outlook for H2 2018

Q2 2018 highlights

  • Sales grew by 5% to EUR 2,589 million (2,464 million in Q2 2017).
  • Comparable EBIT increased by 24% to EUR 334 million (270 million).
  • Sales prices increased in all business areas, outweighing the impact of higher input costs and unfavourable currency exchange rates.
  • Q2 operating profit was held back by several significant scheduled maintenance shutdowns – total impact was EUR -90 million.
  • Operating cash flow was EUR 329 million (269 million).
  • UPM completed the UPM Kaukas pulp mill expansion.

H1 2018 highlights

  • Comparable EBIT increased by 20% to EUR 689 million (575 million in H1 2017).
  • Sales prices increased in all business areas, outweighing the impact of higher input costs and unfavourable currency exchange rates.
  • Delivery volumes were held back by several significant maintenance shutdowns in Q2 and weather-related wood harvesting limitations in Q1.
  • UPM paid a dividend of EUR 613 million.
  • Net debt decreased to EUR 401 million (1,046 million).
  • UPM announced focused investments in Germany, Finland and China to grow in the attractive release liner segments.

Key figures Q2/2018 Q2/2017 Q1/2018 Q1-Q2/2018 Q1-Q2/2017 Q1-Q4/2017
Sales, EURm 2,589 2,464 2,512 5,102 4,946 10,010
Comparable EBITDA, EURm 425 349 449 875 755 1,631
  % of sales 16.4 14.2 17.9 17.1 15.3 16.3
Operating profit, EURm 349 269 385 734 581 1,259
Comparable EBIT, EURm 334 270 355 689 575 1,292
  % of sales 12.9 11.0 14.1 13.5 11.6 12.9
Profit before tax, EURm 337 258 371 708 557 1,186
  Comparable profit before tax, EURm 322 258 341 663 550 1,218
Profit for the period, EURm 269 205 309 577 444 974
Comparable profit for the period, EURm 258 205 288 545 440 1,004
Earnings per share (EPS), EUR 0.50 0.38 0.58 1.08 0.83 1.82
  Comparable EPS, EUR 0.48 0.39 0.54 1.02 0.82 1.88
Return on equity (ROE), % 12.1 10.2 14.0 13.3 10.9 11.5
Comparable ROE, % 11.6 10.2 13.0 12.5 10.8 11.9
Return on capital employed (ROCE), % 14.2 10.8 15.6 14.9 11.2 12.5
Comparable ROCE, % 13.6 10.8 14.3 14.0 11.1 12.8
Operating cash flow, EURm 329 269 208 537 665 1,558
Operating cash flow per share, EUR 0.62 0.50 0.39 1.01 1.25 2.92
Equity per share at end of period, EUR 16.37 15.14 16.83 16.37 15.14 16.24
Capital employed at the end of period, EURm 9,691 9,965 9,733 9,691 9,965 9,777
Net debt at the end of period, EURm 401 1,046 41 401 1,046 174
Net debt to EBITDA (last 12 m.) 0.23 0.68 0.02 0.23 0.68 0.11
Personnel at the end of period 19,836 20,096 19,027 19,836 20,096 19,111

​  Jussi Pesonen, President and CEO, comments on the results:

Commercial success drives growth in sales and earnings 
– strong outlook for H2 2018

"UPM delivered yet another successful quarter of earnings growth. Customer demand for our products continued to be strong and we succeeded in increasing prices in most of our businesses also during the quarter. This enabled us to expand our margins and recover the impact of clearly higher input costs. 
We carried out several significant scheduled maintenance shutdowns during the quarter, which held back our operating profit by approximately EUR 90 million. However, earlier challenges in wood harvesting and logistics were solved and no longer impacted our performance.
Our sales grew by 5% and our comparable EBIT increased by 24% to EUR 334 million. Operating cash flow was strong at EUR 329 million. UPM paid a dividend of EUR 613 million and net debt was EUR 401 million at the end of the quarter.
UPM Biorefining increased its earnings clearly. Customer demand was strong for pulp, biofuels and sawn timber, and sales prices increased. Scheduled maintenance shutdowns were carried out at the Fray Bentos and Kaukas pulp mills and at the Lappeenranta biorefinery. During the Kaukas shutdown, the pulp mill expansion was completed, providing 30,000 tons of additional pulp capacity. 
UPM Communication Papers grew both its sales and earnings in tight markets. The business area achieved high operational efficiency and increased prices. UPM Raflatac performed well and managed to resume earnings growth after a challenging Q1. UPM Plywood had a steady performance in a good market situation. 
UPM Energy improved earnings due to higher electricity prices and volumes. Electricity generation was held back by the annual maintenance shutdown at Olkiluoto power plant and weakened hydropower availability during the quarter.
UPM Specialty Papers enjoyed good market demand and increased prices, but was not able to fully offset the higher pulp costs.
We look to the future with confidence. In the second half of the year we have every opportunity to respond to customer demand with growing deliveries. Our ongoing focused growth projects enable us to develop our market position while maintaining and growing our earnings. During the quarter we announced new focused growth investments in Germany and in China in the attractive release liner business. 
Our transformative prospects provide us with unique and exciting opportunities for significant long-term earnings growth. In Uruguay, the second preparation phase for the potential new world-class pulp mill is proceeding well. In attractive biomolecular businesses we continue to prepare for the potential first industrial-scale biochemical refinery in Germany and study the potential biofuels scale up in Finland. 
In 2009, we redefined UPM as the Biofore Company, creating a new, future-oriented industry category characterized by efficiency, innovation and sustainability. This positioning gave a name to our transformation, energizing both UPMers as well as our stakeholders. We continue to be inspired by the limitless opportunities of bioeconomy. We are committed to delivering renewable and responsible solutions and innovating for a future beyond fossils."

Outlook for 2018

UPM's comparable EBIT is expected to continue growing in 2018 compared with 2017. H2 2018 comparable EBIT is expected to be significantly higher compared with H1 2018.
The fundamentals for UPM businesses in 2018 are favourable. Sales price increases in 2018 are expected to outweigh the increase in variable cost, compared with 2017.
H1 2018 results were impacted by four significant maintenance shutdowns and weather-related wood harvesting limitations. H2 2018 is scheduled to have one significant maintenance shutdown.

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