UPM-Kymmene Corporation Financial Review 2009 2 February 2010 at 09:30
UPM Financial Review for 2009
Q4/2009: Earnings per share were EUR 0.57 (-0.56), excluding special items EUR
0.21
(-0.19). Operating profit excluding special items was EUR 186 million (loss of
EUR 46
million). Stringent cost control contributed to profit improvement, EBITDA
margin was
17.2%. Demand has started to improve.
Q1-Q4/2009: Earnings per share were EUR 0.33 (-0.35), excluding special items
EUR 0.11
(0.42). Operating profit excluding special items was EUR 270 million (513
million).
Strong operating cash flow EUR 1,259 million, net debt reduced by EUR 591
million.
Fixed cost savings worth EUR 300 million.
Key figures
Q4/ Q4/ Q1-Q4/ Q1-Q4/
2009 2008 2009 2008
Sales, EUR million 2,108 2,315 7,719 9,461
EBITDA, EUR million 1) 362 178 1,062 1,206
% of sales 17.2 7.7 13.8 12.7
Operating profit (loss), EUR 126 -286 135 24
million
excluding special items, EUR 186 -46 270 513
million
% of sales 8.8 -2.0 3.5 5.4
Profit (loss) before tax, EUR 311 -360 187 -201
million
excluding special items, EUR 156 -120 107 282
million
Net profit (loss) for the 295 -286 169 -180
period, EUR million
Earnings per share, EUR 0.57 -0.56 0.33 -0.35
excluding special items, EUR 0.21 -0.19 0.11 0.42
Diluted earnings per share, 0.57 -0.56 0.33 -0.35
EUR
Return on equity, % 19.4 neg. 2.8 neg.
excluding special items, % 7.4 neg. 1.0 3.4
Return on capital employed, % 13.2 neg. 3.2 0.2
excluding special items, % 7.2 neg. 2.5 4.6
Operating cash flow per 0.71 0.69 2.42 1.21
share, EUR
Shareholders' equity per 12.67 11.74 12.67 11.74
share at end of period, EUR
Gearing ratio at end of 56 71 56 71
period, %
Net interest-bearing 3,730 4,321 3,730 4,321
liabilities at end of
period, EUR million
Capital employed at end of 11,066 11,193 11,066 11,193
period, EUR million
Capital expenditure, EUR million 741 113 913 551
Capital expenditure excluding 58 102 229 532
acquisitions and shares
Personnel at end of period 23,213 24,983 23,213 24,983
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.
The market in 2009
The global economy experienced a severe recession in 2009 as the financial
crisis
spread into the real economy. Consumer confidence bottomed out at a historic
low level both in Europe and in the US. Declining demand led to lower
industrial production, exports and investments. The global economy showed
signals of stabilisation in the third quarter of 2009 supported by rebounding
confidence and a pickup in global trade. This was partly driven by China, which
performed exceptionally well during the recession in comparison with any other
major country.
The euro strengthened against the US dollar from February onwards and weakened
the competitiveness of euro-area industries.
The UK pound, the Russian rouble and the Swedish crown also weakened against
the euro.
Prices for commodities and raw materials were declining most of the year but
started to increase in the late autumn as the economy started to stabilise.
Demand for wood raw material decreased from the previous year due to
exceptionally low industrial production and high wood inventories in the
beginning of the year. Average market prices in Finland declined from peak
years of 2007-2007.
Demand for chemical pulp declined in the first half of the year, but a rebound
took place in the second half of the year due to strong demand in China.
Chemical pulp market prices started to increase after the second quarter of the
year.
Global advertising expenditure plummeted under the global economic downturn. In
Europe, total advertising expenditure fell more than 10% in 2009 while the
print media spend declined by some 15%. Although print advertising lost some of
its share, it held its place as the largest media in Europe and as the second
largest media globally after television. Global direct mail expenditure held up
better than total advertising, declining by 4% from the previous year.
As a consequence of the decline in print advertising, the demand for graphic
papers in Europe and North America declined. Market balance remained weak
throughout the year.
The retail sector both in Europe and in the US suffered from the low level of
private consumption. The demand shifted towards discount stores at the expense
of branded products and affected the demand for packaging materials as well as
the advertising focus of the retail sector.
Exceptionally low construction activity in 2009 decreased demand for building
materials, including wood-based materials. The construction confidence
indicator started to improve in late 2009, but still remained at a very low
level.
Results
Q4 of 2009 compared with Q4 of 2008
Sales for the fourth quarter of 2009 were EUR 2,108 million, 9% lower than the
EUR 2,315 million in the fourth quarter of 2008. Sales decreased mainly due to
lower sales prices in most of UPM's business areas.
Operating profit was EUR 126 million, 6.0% of sales (loss of EUR 286 million,
-12.4% of sales). The operating profit excluding special items was EUR 186
million, 8.8% of sales (loss of EUR 46 million, -2.0% of sales). Operating
profit includes net charges of EUR 60 million as special items, including
restructuring charges of EUR 44 million in Timber and Plywood operations in
Finland.
Operating profit excluding special items was clearly better than in the same
quarter last year. The comparison period was exceptionally weak, as it included
a wood inventory write down and extensive production downtime in paper, pulp
and plywood mills and sawmills.
The improvement in profitability was mainly driven by lower variable and fixed
costs. Wood costs declined by EUR 80 million from the previous year. Other
variable costs also decreased clearly, including EUR 25 million saved in lower
energy costs.
Cost-saving measures reduced the company's fixed costs by EUR 60 million in
comparison with the same period last year. As part of the measures, UPM
initiated a flexible operating mode in the beginning of 2009, using temporary
capacity shutdowns to adjust production to the low demand.
Changes in sales prices in euro terms reduced operating profit by about EUR 160
million. The average paper price in euros decreased by approximately 8% from
the same period last year. The average price for label materials in local
currencies was about the same. Timber and plywood prices fell substantially.
The increase in the fair value of biological assets net of wood harvested was
EUR 9 million compared to a decrease of EUR 2 million a year before.
The share of results of associated companies and joint ventures was EUR 1
million (16 million negative). The accounting treatment of the associated
company Metsä-Botnia was changed as of 30 June 2009. As of December 2009,
Metsä-Botnia no longer is UPM's associated company (see Pulp business area
footnote 3).
Profit before tax was EUR 311 million (loss of EUR 360 million) and excluding
special items EUR 156 million (loss of EUR 120 million). Special items of EUR
215 million reported in financial items include a capital gain of EUR 220
million on the sales of the approximately 30% share in Metsä-Botnia and a
capital loss of EUR 5 million related to investments in development units.
Interest and other finance costs, excluding special items, were EUR 30 million
(60 million) net. Exchange rate and fair value gains and losses were
EUR 0 million (loss of EUR 14 million).
Income taxes were EUR 16 million (74 million positive). The impact on taxes
from special items was EUR 28 million positive (51 million positive).
Profit for the fourth quarter was EUR 295 million (loss of EUR 286 million) and
earnings per share were EUR 0.57 (-0.56). Earnings per share excluding special
items were EUR 0.21 (-0.19).
2009 compared with 2008
Sales for 2009 were EUR 7,719 million, 18% lower than the EUR 9,461 million in
2008. Sales decreased mainly due to lower deliveries across all of UPM's
business areas.
Operating profit was EUR 135 million, 1.7% of sales (24 million, 0.3% of
sales). The operating profit excluding special items was EUR 270 million, 3.5%
of sales (513 million, 5.4% of sales). Operating profit includes net charges of
EUR 135 million as special items. UPM sold assets related to the former
Miramichi paper mill in Canada and recorded an income of EUR 21 million.
Restructuring measures resulted in net special charges of EUR 109 million
including impairment charges of EUR 18 million. The share of the results of
associated companies includes special charges of EUR 47 million.
Operating profit declined clearly from the previous year. The main reason for
weaker profitability was significantly lower deliveries in all of UPM's
business areas. Lower sales prices also impacted operating profit negatively.
Changes in sales prices in euro terms reduced operating profit by about EUR 260
million. The average paper price in euros decreased by approximately 3% from
last year. The average price for label materials increased. Timber and plywood
prices fell substantially.
UPM responded to lower demand with a flexible way of operating in all of its
business areas, using temporary capacity shutdowns to adjust production to the
low demand. Due to cost saving measures, the company's fixed costs decreased by
EUR 300 million from the previous year.
Wood costs decreased from their earlier peak levels. Compared with last year,
wood costs decreased by EUR 190 million. Energy costs increased slightly.
The increase in the fair value of biological assets net of wood harvested was
EUR 17 million compared to EUR 50 million a year before.
The share of results of associated companies and joint ventures was EUR 95
million negative (62 million positive). The result includes special charges of
EUR 29 million from Metsä-Botnia's Kaskinen pulp mill closure, and impairment
charges of EUR 18 million related to Pohjolan Voima's two power plants. The
accounting treatment of the associated company Metsä-Botnia was changed as of
30 June 2009. As of December 2009, Metsä-Botnia no longer is UPM's associated
company (see Pulp business area footnote 3).
Profit before tax was EUR 187 million (loss of EUR 201 million). Profit before
tax excluding special items was EUR 107 million (282 million). Special items of
EUR 215 million reported in financial items include a capital gain of EUR 220
million on the sales of the approximately 30% share in Metsä-Botnia and a
capital loss of EUR 5 million related to investments in development units.
Interest and other finance costs, excluding special items, were EUR 153 million
(202 million) net. Exchange rate and fair value gains and losses resulted in a
loss of EUR 9 million (25 million).
Income taxes were EUR 18 million (21 million positive). The impact on taxes
from special items was EUR 31 million positive (86 million positive).
Profit for the period was EUR 169 million (loss of EUR 180 million) and
earnings per share were EUR 0.33 (-0.35). Earnings per share excluding special
items were EUR 0.11 (0.42). Operating cash flow per share was EUR 2.42 (1.21).
Financing
In 2009, cash flow from operating activities before capital expenditure and
financing, was EUR 1,259 million (628 million). Net working capital decreased
by EUR 532 million during the period (increased by EUR 132 million).
The gearing ratio as of 31 December 2009 was 56% (71%). Net interest-bearing
liabilities at the end of the period came to EUR 3,730 million (4,321 million).
This includes the consolidated debt from the acquired Fray Bentos pulp mill and
Forestal Oriental plantation forestry company.
In March 2009, UPM replaced the EUR 1.5 billion credit facility that was to
mature in 2010 with a new EUR 825 million credit facility, maturing in 2012.
On 31 December 2009, UPM's cash funds and unused committed credit facilities
totalled EUR 2.2 billion.
Personnel
In 2009, UPM had an average of 23,618 employees (26,017). At the beginning of
the year, the number of employees was 24,983 and at the end of the year it was
23,213. The reduction of 2,294 employees, excluding the impact of Uruguay,
is mostly attributable to ongoing restructuring. The acquisition of the
Fray Bentos pulp mill and Forestal Oriental plantation forestry
company added 524 employees.
Capital expenditure
In 2009, capital expenditure was EUR 913 million, 11.8% of sales (EUR 551
million, 5.8% of sales) and excluding acquisitions and share purchases, EUR 229
million, 3.0% of sales (EUR 532 million, 5.6% of sales). Acquisition of
Metsä-Botnia's Uruguayan operations amounted to EUR 602 million. Operational
capital expenditure totalled EUR 148 million (235 million).
The new renewable energy power plant at the Caledonian mill in Irvine, Scotland
was started in June. The total investment cost was GBP 68 million.
UPM continued its tight investment discipline during 2009. Only few new
investment decisions were made. The largest ongoing project is now the rebuild
of the debarking plant at the Pietarsaari mill in Finland. The total investment
cost is estimated to be EUR 30 million.
In December 2009, UPM made a decision to invest GBP 17 million in a materials
recovery facility at its Shotton paper mill in North Wales. Construction of the
facility will be completed by January 2011.
The ownership of Botnia and its assets in Uruguay
On 8 December, UPM, Metsäliitto Cooperative, M-real Corporation and Oy
Metsä-Botnia Ab (Botnia) completed a transaction whereby Metsäliitto's and
Botnia's shares of the Fray Bentos pulp mill and the eucalyptus plantation
forestry company Forestal Oriental in Uruguay were acquired by UPM and UPM sold
approximately 30% in Botnia to Metsäliitto. In addition UPM acquired 1.2% of
the energy company Pohjolan Voima Oy from Botnia. The companies signed an
agreement concerning the transaction on 22 October 2009.
Following the transaction, UPM has a 91% ownership of common shares in the Fray
Bentos pulp mill, 100% in Forestal Oriental and 17% in Botnia. As of December
2009, Botnia no longer is UPM's associated company but accounted for as an
available-for-sale investment. Consequently, UPM's own annual pulp production
capacity increased from 2.1 million tonnes to 3.2 million tonnes a year and
UPM's share of Botnia's capacity was reduced to 400,000 tonnes. UPM's total
pulp production capacity including its entitlement to Botnia's capacity is 3.6
million tonnes a year.
UPM recorded a EUR 220 million capital gain on the sale of Botnia's shares.
UPM's assets increased by EUR 1,209 million and interest-bearing net debt by
EUR 370 million. In addition, the changes in fair values of the previous
holding increased UPM's equity by EUR 443 million.
Pro forma financial information
If the Botnia transaction had occurred on 1 January 2009,
UPM's sales would have been EUR 7,923 million, operating profit EUR 202
million, and operating profit excluding special items EUR 308 million. Profit
for the period would have been EUR 219 million.
Pro forma key figures
EUR million Reported 2009 Pro forma 1) Pro forma 2)
adjustments 2009
Sales 7,719 204 7,923
EBITDA 1,062 92 1,154
Operating profit 135 67 202
excluding special items 270 38 308
Profit before tax 187 52 239
excluding special items 107 23 130
Profit for the period 169 50 219
1) Sales total of EUR 350 million include sales of EUR 146 million
to UPM's units. Adjustments, among others, include reversal of
special items of EUR 29 million related to the closure of
the Kaskinen mill.
Pulp business area pro forma key figures
EUR million Reported 2009 Pro forma Pro forma 2)
adjustments 2009
Sales 653 350 1,003
EBITDA -18 92 74
Operating profit -156 67 -89
excluding special items -127 38 -89
2)Reported 2009 includes December 2009, and the pro forma adjustments
January-November of the Uruguayan operations.
Restructuring
The Kajaani paper mill and Tervasaari pulp mill closures were completed at the
end of 2008. Due to the reduced demand for paper and pulp, the closures had
only minor impact on UPM's paper or pulp deliveries.
The Label business restructured its European operations in 2009. The plan was
announced in November 2008. UPM Raflatac permanently closed a number of
self-adhesive labelstock production lines and reduced slitting capacity in the
United Kingdom, France, Germany, Hungary and Finland. One slitting terminal was
also closed in the United States. The restructuring was completed by the end of
the third quarter of 2009.
In November 2009, UPM announced a plan to improve the plywood and timber
businesses' long term cost competitiveness and increase added value in birch
plywood production in Finland. Decisions on the plan were announced in January
2010. UPM will permanently close the plywood mill and sawmill in Heinola, the
Kaukas plywood mill in Lappeenranta, and the further processing mill in Parkano
during the first half of 2010. These measures will decrease the number of UPM
employees by approximately 830.
As part of the restructuring, UPM will invest approximately EUR 25 million in
the expansion of the Savonlinna plywood mill and the development of production
at the Kaukas sawmill and the Aureskoski further processing mill.
The Lahti plywood processing mill was closed in October and its production was
moved to other mills.
In Forest and timber, a further processing mill in Boulogne in France was
closed in August and the operations were centralised to the Aigrefeuille mill.
Restructuring has been necessary to improve cost competitiveness. The measures
taken in 2009, together with measures initiated in previous years, reduced the
number of employees by 2,300 from the end of 2008. Out of these, 620 were due
to closures of production. The annualised employee-related cost savings are
about EUR 115 million.
Shares
UPM shares worth EUR 5,691 million (10,549 million) in total were traded on the
NASDAQ OMX Helsinki stock exchange during 2009. The highest quotation was EUR
9.78 in January and the lowest EUR 4.33 in April.
The company's ADSs are traded on the US over-the-counter (OTC) market under a
Level 1 sponsored American Depositary Receipt programme.
The Annual General Meeting held on 25 March 2009 approved a proposal by the
Board of Directors to authorise the Board of Directors to decide on the
buy-back of not more than 51,000,000 of the company's own shares. The
authorisation is valid for 18 months from the date of the decision.
The Annual General Meeting of 27 March 2007 authorised the Board to decide on a
free issue of shares to the company itself so that the total number of shares
to be issued to the company combined with the number of its own shares bought
back under the buy-back authorisation may not exceed 1/10 of the total number
of shares in the company.
In addition, the Board has the authority to decide to issue shares and special
rights entitling the holder to shares of the company. The number of new shares
to be issued, including shares to be obtained under special rights, shall be no
more than 250,000,000. Of that, the maximum number that can be issued to the
company's shareholders based on their pre-emptive rights is 250,000,000 shares
and the maximum number that can be issued deviating from the shareholders'
pre-emptive rights in a directed share issue is 100,000,000 shares. The maximum
number of new shares to be issued as part of the company's incentive programmes
is 5,000,000. Furthermore, the Board is authorised to decide on the disposal of
the company's own shares. To date, this authorisation has not been used. These
authorisations of the Annual General Meeting 2007 will remain valid for no more
than three years from the date of the decision.
The Annual General Meeting of 27 March 2007 also decided to grant share options
in connection with the company's share-based incentive plans. In option
programmes 2007A, 2007B and 2007C, the total number of share options is no more
than 15,000,000 and they will entitle the holders to subscribe for a total of
no more than 15,000,000 new shares in the company.
The Annual General Meeting of 2005 decided to grant a total of 9,000,000 share
options of which the total number of share options designated as 2005H was not
more than 3,000,000, and would entitle the holders to subscribe for a total of
no more than 3,000,000 new shares. The share options designated as 2005H are
outstanding as at 31 December 2009. The share options designated as 2005G
expired at the end of October 2009. No shares were subscribed with share
options 2005G.
Apart from the above, the Board of Directors has no current authorisation to
issue shares, convertible bonds or share options.
The number of shares entered in the Trade Register on 31 December 2009 was
519,970,088. Through the issuance authorisation and share options, the number
of shares may increase to a maximum of 787,970,088.
At the end of the year the company did not hold any of its own shares.
The company has received the following notifications from shareholders:
BlackRock Inc. on 8 December 2009 held 5.36% of UPM's shares and voting rights.
Franklin Templeton on 27 July 2009 announced its ownership in UPM had declined
below 5% of the company's shares and voting rights.
Company directors
At the Annual General Meeting nine members were elected to the Board of
Directors. Mr Matti Alahuhta, President and CEO of KONE Corporation, Mr Berndt
Brunow, Board member of Oy Karl Fazer Ab, Mr Karl Grotenfelt, Chairman of the
Board of Directors of Famigro Oy, Dr. Georg Holzhey, former Executive Vice
President of UPM and Director of G. Haindl'sche Papierfabriken KGaA, Ms Wendy
E. Lane, Chairman of the American investment firm Lane Holdings, Inc., Mr Jussi
Pesonen, President and CEO of UPM, Ms Ursula Ranin, Board member of Finnair
plc, Mr Veli-Matti Reinikkala, President of ABB Process Automation Division and
Mr Björn Wahlroos, Chairman of the Board of Sampo plc were re-elected as
members of the Board of Directors.
The term of office of the members of the Board of Directors lasts until the end
of the next Annual General Meeting.
At the assembly meeting of the Board of Directors, Mr Björn Wahlroos was
re-elected as Chairman, and Mr Berndt Brunow and Dr. Georg Holzhey were
re-elected as Vice Chairmen.
In addition, the Board of Directors appointed from among its members an Audit
Committee with Mr Karl Grotenfelt as Chairman, and Ms Wendy E. Lane and Mr
Veli-Matti Reinikkala as members. A Human Resources Committee was appointed
with Mr Berndt Brunow as Chairman, and Dr. Georg Holzhey and Ms Ursula Ranin as
members. Furthermore, a Nomination and Corporate Governance Committee was
appointed with Mr Björn Wahlroos as Chairman, and Mr Matti Alahuhta and Mr Karl
Grotenfelt as members.
Litigation and other legal actions
The investigations of certain competition authorities into alleged antitrust
activities with respect to various UPM products, as well as litigation arising
therefrom, have ended in all material respects.
In Finland, UPM is participating in the building project of a new nuclear power
plant, Olkiluoto 3, through its associated company Pohjolan Voima Oy. Pohjolan
Voima Oy is a majority shareholder of Teollisuuden Voima Oy ("TVO") with 58.12%
of shares. UPM's indirect share of the capacity of the Olkiluoto 3 is
approximately 29 %. The original agreed timetable for the start up was summer
2009 but the construction of the unit is delayed. The latest anticipated
start-up time is after June 2012. TVO has requested the plant supplier, the
consortium AREVA-Siemens, to provide a re-analysis of the anticipated start-up
time.
TVO has informed UPM that the arbitration filed in December 2008 by
AREVA-Siemens, concerning the delay at Olkiluoto 3 and related costs, amounted
to EUR 1.0 billion. In response, TVO filed a counter-claim in April 2009 for
costs and losses that TVO is incurring due to the delay and other defaults on
the part of the supplier. The value of TVO's counterclaim was approximately EUR
1.4 billion.
Events after the balance sheet date
The Group's management is not aware of any significant events occurring after
31 December 2009.
Risk factors
UPM has increased its ownership interest in the Fray Bentos pulp mill in
Uruguay to 91% as a result of the acqusition of Metsäliitto Cooperative's and
Oy Metsä-Botnia Ab's shares in the Fray Bentos pulp mill in December 2009.
There are three separate litigations pending against the government of Uruguay
related to the Fray Bentos pulp mill, and one litigation directly against the
company operating the pulp mill. All of these litigations have been commenced
before the pulp mill started its operations in November 2007 and may last
several years.
Outlook for 2010
Recovery in UPM's main markets is expected to be slow and differ country by
country. Demand for consumer goods is forecast to improve, but advertising
expenditure in print media and demand for graphic papers are expected to
improve with some delay. Investment activity, including construction, has shown
only weak signs of recovery and this will delay pick up in demand for
construction materials such as timber and plywood. In Asia growth is expected
to continue especially in China.
Low capacity utilisation rates of the company's timber, plywood and European
paper mills will continue. Necessary production curtailments will require
continuation of a flexible way of working in these operations.
Electricity generation volume will be about the same as last year. This is
assuming that lower than average hydrological balance continues in Finland.
Based on current forward sale agreements and Nordpool forward prices, average
sales price for electricity is estimated to be about the same as last year.
Chemical pulp deliveries, on a comparable basis, are expected to be higher than
last year. Current prices for both hardwood and softwood pulp are higher than
last year.
Paper demand in Europe is forecast to increase from 2009 and thus UPM's paper
deliveries for 2010 are expected to be higher than last year. However, in
Europe negotiations for 2010 deliveries of publication papers are still ongoing
and there is a severe price pressure especially for newsprint deliveries. Price
outlook for fine and speciality papers is more positive due to better market
balance and increased cost of chemical pulp. Current estimate is that average
price for UPM's all paper deliveries for the year will be clearly lower than
last year. Order intake for the first quarter deliveries has been better than a
year ago but average price for these deliveries is clearly lower than last
year.
Demand for self-adhesive labelstock is estimated to improve from the last year
in all main markets. There are cost pressures especially from oil based raw
materials but on average prices are expected to increase to compensate at least
part of such cost increases.
The operating profit (excluding special items) for the year 2010 is not
expected to change materially from the last year. The first quarter is expected
to be seasonally the weakest quarter.
Capital expenditure for 2010 is forecast to be about EUR 300 million.
Dividend for 2009
The Board of Directors will propose to the Annual General Meeting to be held on
22 March 2010 that a dividend of EUR 0.45 per share be paid in respect of the
2009 financial year (EUR 0.40). It is proposed that the dividend be paid on 7
April 2010.
Financial information in 2010
The Annual Report for 2009 will be published on the company's website
www.upm-kymmene.com on 23 February 2010. The printed Annual Report will be
available on 15 March 2010.
Interim Report January-March 2010: 28 April 2010
Interim Report January-June 2010: 3 August 2010
Interim Report January-September 2010: 28 October 2010
Business area reviews
Energy
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/
2009 2009 2009 2009 2008 2008 2008
Sales, EUR million 128 108 100 136 141 129 103
EBITDA, EUR million 1) 57 35 41 57 76 58 34
% of sales 44.5 32.4 41.0 41.9 53.9 45.0 33.0
Share of results of -8 -24 -4 -4 -11 -8 -2
associated companies and
joint ventures, EUR million
Depreciation, amortisation -2 -1 -1 -2 -3 -1 -1
and impairment charges, EUR million
Operating profit, EUR million 47 10 36 51 62 49 31
% of sales 36.7 9.3 36.0 37.5 44.0 38.0 30.1
Special items, EUR million 2) -1 -17 - - - - -
Operating profit excl. 48 27 36 51 62 49 31
special items, EUR million
% of sales 37.5 25.0 36.0 37.5 44.0 38.0 30.1
Electricity deliveries, 1,000 2,277 2,103 1,999 2,486 2,731 2,653 2,344
MWh
Q1/ Q1-Q4/ Q1-Q4/
2008 2009 2008
Sales, EUR million 105 472 478
EBITDA, EUR million 1) 39 190 207
% of sales 37.1 40.3 43.3
Share of results of -5 -40 -26
associated companies and
joint ventures, EUR million
Depreciation, amortisation -1 -6 -6
and impairment charges, EUR
million
Operating profit, EUR million 33 144 175
% of sales 31.4 30.5 36.6
Special items, EUR million 2) - -18 -
Operating profit excl. 33 162 175
special items, EUR million
% of sales 31.4 34.3 36.6
Electricity deliveries, 1,000 2,439 8,865 10,167
MWh
Capital employed (average), 870 951
EUR million
ROCE (excl. special items), % 18.6 18.4
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In 2009, special items relate to impairments of associated company Pohjolan
Voima's two power plants.
Q4 of 2009 compared with Q4 of 2008
Operating profit excluding special items was EUR 48 million, EUR 14 million
lower than last year (62 million). Sales decreased by 9% to EUR 128 million
(141 million). External sales was EUR 38 million (57 million). The total
electricity sales volume was 2.3 TWh in the quarter (2.7 TWh).
Profitability weakened mainly due to lower sales volumes. The hydropower volume
was 38% lower in comparison with the previous year.
2009 compared with 2008
Operating profit excluding special items was EUR 162 million (175 million).
Sales decreased slightly to EUR 472 million (478 million). External sales was
EUR 135 million (137 million). The electricity deliveries were 8.9 TWh (10.2
TWh).
Profitability weakened in comparison with the previous year due to lower sales
volumes as the annual volume of hydropower was almost 32% lower than last year.
The average electricity sales price increased by 17% to EUR 43.8/MWh (37.5/
MWh) mainly due to long-term market-based pricing formula. The average
cost of procured electricity increased due to the lower share of hydro power
volumes.
The share of results of associated companies includes asset write-downs of EUR
18 million related to Pohjolan Voima's two power plants.
Market review
In 2009, the average spot electricity price in the Nordic electricity exchange
decreased 22% from the previous year to EUR 35.0/MWh (44.7/MWh). The
consumption of electricity in the Nordic area decreased due to low industrial
activity.
The Nordic water reservoirs were 10% below the long term average level. The
average price for EUA CO2 emission allowances was EUR 13.8/t, almost 41% lower
than in the previous year. After a substantial decline in the market
prices of oil and coal during the second half of 2008, coal market prices
remained fairly stable in 2009. During 2009, oil market prices
increased from about USD 46/barrel to about USD 78/barrel.
The one-year forward electricity price in the Nordic electricity exchange was
EUR 42.5/MWh at the end of 2009, 12% higher than the one year forward price at
the end of 2008 (37.9/MWh).
Pulp
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2009 2009 2009 2009 2008 2008 2008 2008
Sales, EUR million 226 156 132 139 200 228 247 269
EBITDA, EUR million 1) 53 8 -24 -55 9 38 35 57
% of sales 23.5 5.1 -18.2 -39.6 4.5 16.7 14.2 21.2
Change in fair value of -1 - - - - - - -
biological assets and wood
harvested, EUR million
Share of results of 7 4 -16 -47 -4 44 20 26
associated companies and
joint ventures, EUR million 3)
Depreciation, amortisation -24 -21 -20 -20 -73 -22 -17 -16
and impairment charges, EUR million
Operating profit, EUR million 35 -9 -60 -122 -76 60 38 67
% of sales 15.5 -5.8 -45.5 -87.8 -38.0 26.3 15.4 24.9
Special items, EUR million 2) - - - -29 -59 - - -
Operating profit excl. 35 -9 -60 -93 -17 60 38 67
special items, EUR million
% of sales 15.5 -5.8 -45.5 -66.9 -8.5 26.3 15.4 24.9
Pulp deliveries, 1,000 t 550 446 391 372 421 480 527 554
Q1-Q4/ Q1-Q4/
2009 2008
Sales, EUR million 653 944
EBITDA, EUR million 1) -18 139
% of sales -2.8 14.7
Change in fair value of -1 -
biological assets and wood
harvested, EUR million
Share of results of -52 86
associated companies and
joint ventures, EUR million 3)
Depreciation, amortisation -85 -128
and impairment charges, EUR
million
Operating profit, EUR million -156 89
% of sales -23.9 9.4
Special items, EUR million 2) -29 -59
Operating profit excl. -127 148
special items, EUR million
% of sales -19.4 15.7
Pulp deliveries, 1,000 t 1,759 1,982
Capital employed (average), 1,668 1,674
EUR million
ROCE (excl. special items), % -7.6 8.8
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In 2009, special items of EUR 29 million relate to the associated company
Metsä-Botnia's Kaskinen pulp mill closure. In 2008, special items of EUR 59
million relate to the closure of the Tervasaari pulp mill.
3) In the balance sheet in the interim report for January-June, on 30 June
2009, UPM has regrouped the 30% transferable share of Botnia's book value as
assets held for sale. Consequently, from July 2009, UPM has not included the
share of the transferable Botnia operations in the share of results of
associated companies.
Q4 of 2009 compared with Q4 of 2008
Operating profit excluding special items was EUR 35 million (loss of EUR 17
million). The sales from UPM's own pulp mills increased by 13% to EUR 226
million (200 million) and deliveries by 31% to 550,000 tonnes (421,000) mainly
attributed to the newly acquired Fray Bentos mill.
The share of results of the associated company Metsä-Botnia was profit of EUR 7
million (loss of EUR 4 million).
Profitability improved in comparison with the previous year due to lower wood
and energy costs. The sales price was lower.
The Fray Bentos mill and Forestal Oriental eucalyptus plantation forestry
company are included in the Pulp business area as of December 2009.
Consequently, Oy Metsä-Botnia Ab is no longer an associated company of UPM and
therefore is not reported on in the Pulp business area.
2009 compared with 2008
Operating loss excluding special items was EUR 127 million (profit of EUR 148
million). The sales from UPM's own pulp mills decreased by 31% to EUR 653
million (944 million) and deliveries by 11% to 1,759,000 tonnes (1,982,000).
Due to reduced internal consumption, the Tervasaari pulp mill closure at the
end of 2008 did not have a notable impact on deliveries.
Profitability weakened from last year mainly due to an approximately 23% lower
average pulp price and lower deliveries. Wood costs were at a high level until
autumn but started to decline towards the end of the year.
Chemical pulp inventories decreased from the beginning of the year and remained
low in the latter part of the year.
The share of results of the associated company Metsä-Botnia was loss of EUR 52
million (profit of EUR 86 million). The result includes special charges of EUR
29 million from Metsä-Botnia's Kaskinen mill closure.
The Fray Bentos mill and Forestal Oriental eucalyptus plantation forestry
company are included in the Pulp business area as of December 2009. As of the
same date, Oy Metsä-Botnia Ab is no longer an associated company of UPM and
therefore is not reported in the Pulp business area.
Market review
Annual shipments of global chemical market pulp increased almost 2% from the
previous year. In the first half of 2009, shipments declined from the
comparison period, but in the second part of the year, shipments increased due
to strong demand in China. Chemical pulp producer inventories declined from the
high level of the beginning of the year due to extensive production
curtailments and strong demand in China.
Chemical pulp market prices declined in the first half of the year but started
to increase during the second half. The average softwood pulp (NBSK) market
price in euro terms, at EUR 471/tonne, was 19% lower than in last year (EUR
582/tonne). The bottom market price during the period was EUR 421/tonne. At the
end of the year, the NBSK market price was EUR 555/ tonne.
The average hardwood pulp (BHKP) market price in euro terms also decreased by
25% from last year to EUR 402/tonne (EUR 539/tonne). The bottom market price
during the period was EUR 352/tonne. At the end of the year the BHKP market
price was EUR 486/tonne.
Forest and timber
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2009 2009 2009 2009 2008 2008 2008 2008
Sales, EUR million 348 295 309 385 419 475 518 508
EBITDA, EUR million 1) 30 24 -15 -15 -52 -4 4 4
% of sales 8.6 8.1 -4.9 -3.9 -12.4 -0.8 0.8 0.8
Change in fair value of 10 -13 10 11 -2 4 20 28
biological assets and wood
harvested, EUR million
Share of results of 1 -1 1 1 -1 - - 1
associated companies and
joint ventures, EUR million
Depreciation, amortisation -11 -4 -14 -5 -6 -36 -7 -7
and impairment charges, EUR million
Operating profit, EUR million 21 6 -18 -18 -63 -38 17 25
% of sales 6.0 2.0 -5.8 -4.7 -15.0 -8.0 3.3 4.9
Special items, EUR million 2) -14 1 -8 -10 -2 -33 - -1
Operating profit excl. 35 5 -10 -8 -61 -5 17 26
special items, EUR million
% of sales 10.1 1.7 -3.2 -2.1 -14.6 -1.1 3.3 5.1
Sawn timber deliveries, 1,000 413 355 366 363 421 510 628 573
m3
Q1-Q4/ Q1-Q4/
2009 2008
Sales, EUR million 1,337 1,920
EBITDA, EUR million 1) 24 -48
% of sales 1.8 -2.5
Change in fair value of 18 50
biological assets and wood
harvested, EUR million
Share of results of 2 -
associated companies and
joint ventures, EUR million
Depreciation, amortisation -34 -56
and impairment charges, EUR million
Operating profit, EUR million -9 -59
% of sales -0.7 -3.1
Special items, EUR million 2) -31 -36
Operating profit excl. 22 -23
special items, EUR million
% of sales 1.6 -1.2
Sawn timber deliveries, 1,000 1,497 2,132
m3
Capital employed (average), 1,717 1,878
EUR million
ROCE (excl. special items), % 1.3 -1.2
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) Special items of EUR 14 million including impairment charges of
EUR 5 million, in the fourth quarter of 2009 relate to restructuring
of Timber operations in Finland. Special items for the second
quarter of 2009 include impairment charges of EUR 7 million related
to wood procurement operations. In the first quarter of 2009, special
items of EUR 10 million relate to the sales loss of Miramichi's forestry
and sawmilling operations' assets. Special items in 2008
include an impairment charge of EUR 31 million related to fixed assets of
the Finnish sawmills.
Q4 of 2009 compared with Q4 of 2008
Operating profit excluding special items was EUR 35 million (loss of EUR 61
million). Sales declined by 17% to EUR 348 million (419 million). Sawn timber
deliveries decreased by 2% to 413,000 cubic metres (421,000).
The increase in the fair value of biological assets (growing trees) was EUR 52
million (12 million). The cost of wood raw material harvested from the Group's
own forests was EUR 42 million (14 million). The net effect was EUR 10 million
positive (2 million negative).
2009 compared with 2008
Operating profit excluding special items was EUR 22 million (loss of EUR 23
million). Sales declined by 30% to EUR 1,337 million (1,920 million). Sawn
timber deliveries decreased by 30% to 1,497,000 cubic metres (2,132,000).
Comparison period included a wood inventory write down of EUR 36 million, which
was booked at the end of year 2008.
The average price of delivered timber goods decreased by 7%.
Wood inventories decreased significantly from the beginning of the year and
released working capital.
The increase in the fair value of biological assets (growing trees) was EUR 98
million (138 million). The cost of wood raw material harvested from the Group's
own forests was EUR 80 million (88 million). The net effect was EUR 18 million
positive (50 million positive).
In November 2009, UPM announced restructuring plans to improve the
competitiveness of its Timber operations in Finland. UPM will permanently close
the sawmill in Heinola and the further processing mill in Parkano during the
first half of 2010.
Market review
Wood purchases in the Finnish wood market were 45% lower compared to the
previous year. However, market activity started to recover slightly towards the
end of the year.
Lower industrial production and high wood inventories at the beginning of the
year were the main reasons for lower purchases. Wood market prices declined by
an average of almost 20% compared to the previous year.
In 2009, demand for both redwood and whitewood sawn timber in Europe declined
substantially in comparison with the previous year. The weak market balance
resulted in lower prices.
Paper
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/
2009 2009 2009 2009 2008 2008 2008
Sales, EUR million 1,558 1,454 1,388 1,367 1,750 1,761 1,727
EBITDA, EUR million 1) 221 274 247 187 189 271 216
% of sales 14.2 18.8 17.8 13.7 10.8 15.4 12.5
Share of results of 1 - -1 -1 1 - -
associated companies and
joint ventures, EUR million
Depreciation, amortisation -140 -142 -147 -149 -264 -388 -156
and impairment charges, EUR million
Operating profit, EUR million 74 126 85 60 -126 -114 60
% of sales 4.7 8.7 6.1 4.4 -7.2 -6.5 3.5
Special items, EUR million 2) -8 -6 -10 23 -153 -227 -
Operating profit excl. 82 132 95 37 27 113 60
special items, EUR million
% of sales 5.3 9.1 6.8 2.7 1.5 6.4 3.5
Deliveries, publication 1,576 1,464 1,323 1,304 1,809 1,760 1,749
papers, 1,000 t
Deliveries, fine and 945 872 813 724 784 863 923
speciality papers, 1,000 t
Paper deliveries total, 1,000 2,521 2,336 2,136 2,028 2,593 2,623 2,672
t
Q1/ Q1-Q4/ Q1-Q4/
2008 2009 2008
Sales, EUR million 1,773 5,767 7,011
EBITDA, EUR million 1) 209 929 885
% of sales 11.8 16.1 12.6
Share of results of - -1 1
associated companies and
joint ventures, EUR million
Depreciation, amortisation -159 -578 -967
and impairment charges, EUR million
Operating profit, EUR million 51 345 -129
% of sales 2.9 6.0 -1.8
Special items, EUR million 2) 1 -1 -379
Operating profit excl. 50 346 250
special items, EUR million
% of sales 2.8 6.0 3.6
Deliveries, publication 1,772 5,667 7,090
papers, 1,000 t
Deliveries, fine and 981 3,354 3,551
speciality papers, 1,000 t
Paper deliveries total, 1,000 t 2,753 9,021 10,641
Capital employed (average), 5,714 6,503
EUR million
ROCE (excl. special items), % 6.1 3.8
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In the fourth and third quarter of 2009, special items of EUR 8 million
and EUR 6 million relate to restructuring charges. Special items for
the second quarter of 2009 include charges of EUR 9 million related to
personnel reduction in Nordland mill, impairment reversals of EUR 4 million
and other restructuring charges of EUR 5 million. In the first
quarter of 2009, special items include an income of EUR 31 million
related to the sale of the assets of the former Miramichi paper mill and
charges of EUR 8 million related to restructuring measures. In 2008,
special items include the goodwill impairment charge of EUR 230 million,
impairment charges of EUR 101 million and other restructuring costs
of EUR 42 million related to the closure of the Kajaani paper mill,
and other restructuring costs, net of EUR 6 million.
Q4 of 2009 compared with Q4 of 2008
Operating profit excluding special items was EUR 82 million, EUR 55 million
higher than a year ago (27 million). Sales were EUR 1,558 million (1,750
million). Paper deliveries decreased by 3% to 2,521,000 tonnes (2,593,000).
Publication paper deliveries (magazine papers and newsprint) decreased by 13%.
Fine and speciality paper deliveries increased by 21% from the previous year,
driven especially by the recovery of fine paper demand in China.
Profitability improved from the comparison period. Lower paper prices had a
significant negative impact on profitability, but this was more than offset by
lower fibre and other variable costs, and decreased fixed costs.
The average price for all paper deliveries when translated into euros was 8%
lower than in the fourth quarter of 2008.
2009 compared with 2008
Operating profit excluding special items was EUR 346 million, EUR 96 million
higher than a year ago (250 million). Sales were EUR 5,767 million (7,011
million). Paper deliveries decreased by 15% to 9,021,000 tonnes (10,641,000).
Publication paper deliveries (magazine papers and newsprint) decreased by 20%
and fine and speciality paper deliveries by 6% from the previous year.
The Kajaani paper mill was closed at the end of 2008. Due to reduced demand,
the closure had only a minor impact on UPM's paper deliveries.
Profitability improved from the corresponding period last year. Lower
deliveries and sales prices had a significant negative impact on profitability,
but this was more than offset by lower costs for fibre, mainly for chemical
pulp, and decreased fixed costs.
The average price for all paper deliveries when translated into euros was 3%
lower than last year.
Market review
In Europe in 2009, demand for both publication papers and fine papers was 16%
lower than a year ago. In North America, demand for publication papers
continued to decline and was 22% down from last year. In Asia, however, demand
for fine papers grew.
In Europe, paper prices decreased in the fourth quarter of 2009 from the
previous quarter. For magazine papers, prices decreased by about 3% from the
third quarter and for newsprint by about 2%. Coated and uncoated fine paper
prices decreased by about 2%. In 2009, average prices decreased by 1% for
magazine papers and by 8% for uncoated fine paper, but increased by 2% for
newsprint. Coated fine paper prices remained unchanged from the previous year.
In North America, the average US dollar price for magazine papers was 13% lower
in 2009 than in 2008. In Asia, market prices for fine papers decreased from
last year, but increased in the second half of 2009 from the first half. In the
fourth quarter, prices had risen higher than in the same period last year.
Label
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2009 2009 2009 2009 2008 2008 2008 2008
Sales, EUR million 252 242 226 223 233 239 245 242
EBITDA, EUR million 1) 25 29 18 6 -1 9 15 11
% of sales 9.9 12.0 8.0 2.7 -0.4 3.8 6.1 4.5
Depreciation, amortisation -8 -9 -11 -9 -16 -8 -7 -8
and impairment charges, EUR million
Operating profit, EUR million 16 18 4 -3 -38 1 8 3
% of sales 6.3 7.4 1.8 -1.3 -16.3 0.4 3.3 1.2
Special items, EUR million 2) -1 -2 -5 - -28 - - -
Operating profit excl. 17 20 9 -3 -10 1 8 3
special items, EUR million
% of sales 6.7 8.3 4.0 -1.3 -4.3 0.4 3.3 1.2
Q1-Q4/ Q1-Q4/
2009 2008
Sales, EUR million 943 959
EBITDA, EUR million 1) 78 34
% of sales 8.3 3.5
Depreciation, amortisation -37 -39
and impairment charges, EUR million
Operating profit, EUR million 35 -26
% of sales 3.7 -2.7
Special items, EUR million 2) -8 -28
Operating profit excl. 43 2
special items, EUR million
% of sales 4.6 0.2
Capital employed (average), 503 510
EUR million
ROCE (excl. special items), % 8.5 0.4
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In the fourth and third quarter of 2009, special items relate to
restructuring charges. In the second quarter of 2009, special items include
impairment charges of EUR 2 million and other restructuring charges of
EUR 3 million. In 2008, special items of EUR 28 million relate to
measures to reduce coating capacity and close two
slitting terminals in Europe.
Q4 of 2009 compared with Q4 of 2008
Operating profit excluding special items was EUR 17 million (loss of EUR 10
million). Sales were EUR 252 million (233 million).
Profitability improved clearly from the same period last year. Delivery volumes
of self-adhesive label materials grew from the previous year. Raw material
costs
were lower than last year. Fixed costs decreased. Average sales prices in local
currencies were on about the same level.
2009 compared with 2008
Operating profit excluding special items was EUR 43 million (2 million). Sales
were EUR 943 million (959 million).
Profitability improved from the same period last year due to decreased costs
and increased prices. Fixed costs decreased substantially and raw material
costs were lower than in the previous year. Average sales prices both in local
currency and converted to euros increased from last year.
Delivery volumes of self-adhesive label materials declined from last year,
driven by lower economic activity.
The restructuring of European operations was completed as planned by the end of
the third quarter. The restructuring, combined with the new plant in Wroclaw
that started up in November 2008, has improved the competitiveness of European
operations.
Market review
During the first half of the year, demand for self-adhesive label materials
declined in all markets from last year as demand for consumer products and
shipments of goods slowed down. Demand started to improve in the third quarter,
and in the fourth quarter it is estimated to have grown compared with the same
period last year.
Plywood
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2009 2009 2009 2009 2008 2008 2008 2008
Sales, EUR million 81 73 77 75 102 121 150 157
EBITDA, EUR million 1) 3 -5 -5 -23 -5 3 22 26
% of sales 3.7 -6.8 -6.5 -30.7 -4.9 2.5 14.7 16.6
Depreciation, amortisation -12 -5 -5 -5 -5 -5 -6 -5
and impairment charges, EUR million
Operating profit, EUR million -33 -10 -10 -29 -10 -2 19 21
% of sales -40.7 -13.7 -13.0 -38.7 -9.8 -1.7 12.7 13.4
Special items, EUR million 2) -30 - - -1 - - 3 -
Operating profit excl. -3 -10 -10 -28 -10 -2 16 21
special items, EUR million
% of sales -3.7 -13.7 -13.0 -37.3 -9.8 -1.7 10.7 13.4
Deliveries, plywood, 1,000 m3 150 143 141 133 160 188 227 231
Q1-Q4/ Q1-Q4/
2009 2008
Sales, EUR million 306 530
EBITDA, EUR million 1) -30 46
% of sales -9.8 8.7
Depreciation, amortisation -27 -21
and impairment charges, EUR million
Operating profit, EUR million -82 28
% of sales -26.8 5.3
Special items, EUR million 2) -31 3
Operating profit excl. -51 25
special items, EUR million
% of sales -16.7 4.7
Deliveries, plywood, 1,000 m3 567 806
Capital employed (average), 266 307
EUR million
ROCE (excl. special items), % -19.2 8.1
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) Special items in the fourth quarter of 2009 include impairment charges of
E 6 million and other restructuring charges of E 24 million. Special items in
2008 include reversals of provisions related to the disposed Kuopio plywood
mill.
Q4 of 2009 compared with Q4 of 2008
Operating loss excluding special items was EUR 3 million (loss of EUR 10
million). Sales decreased by 21% to EUR 81 million (102 million). Plywood
deliveries declined by 6% to 150,000 cubic metres (160,000).
Plywood reported a smaller operating loss, than in the comparison period due to
decreased fixed costs and lower wood costs. Lower sales prices had a negative
impact on the results.
2009 compared with 2008
Operating loss excluding special items was EUR 51 million (profit of EUR 25
million). Sales decreased by 42% to EUR 306 million (530 million). Plywood
deliveries declined by 30% to 567,000 cubic metres (806,000).
Plywood reported an operating loss due to significantly lower delivery volumes
and sales prices than in the comparison period. Weak market demand led to
extensive production downtime at all mills. Material fixed cost reductions were
achieved throughout the organisation, but these could not compensate for the
adverse impact of lower deliveries and prices.
In November 2009, UPM announced a plan to improve the plywood businesses' long
term cost competitiveness and increase added value in birch plywood production
in Finland.
UPM will rebuild the Savonlinna plywood mill and permanently close the Heinola
and Kaukas mills. The Heinola mill was temporarily shut down from January 2009
onwards. The Kaukas plywood mill was temporarily shut down from May onwards.
At the Kalso veneer mill, a production automation project was completed in May
2009.
The Lahti plywood processing mill was closed in October 2009 and its production
was moved to other mills.
Market review
In Europe, plywood demand declined substantially from last year due to record
low construction activity and low demand for engineered end products in
transportation and other industrial end uses. Declined demand in Europe has
left much idle capacity.
Inventories were reduced in all parts of the supply chain in the first half of
the year. This inventory reduction came to an end in the third quarter. The
market prices of plywood declined from the previous year.
Other operations
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2009 2009 2009 2009 2008 2008 2008 2008
Sales, EUR million 35 21 21 34 34 52 66 48
EBITDA, EUR million 1) -27 -31 -24 -29 -38 3 -13 -9
Share of results of - - -2 -2 -1 -1 3 -
associated companies and
joint ventures, EUR million
Depreciation, amortisation -3 -3 -3 -3 2 -2 -5 -3
and impairment charges, EUR million
Operating profit, EUR million -34 -45 -29 -34 -35 4 -16 -7
Special items, EUR million 2) -6 -11 - - 2 4 -1 5
Operating profit excl. -28 -34 -29 -34 -37 0 -15 -12
special items, EUR million
Q1-Q4/ Q1-Q4/
2009 2008
Sales, EUR million 111 200
EBITDA, EUR million 1) -111 -57
Share of results of -4 1
associated companies and
joint ventures, EUR million
Depreciation, amortisation -12 -8
and impairment charges, EUR million
Operating profit, EUR million -142 -54
Special items, EUR million 2) -17 10
Operating profit excl. -125 -64
special items, EUR million
Capital employed (average), 141 137
EUR million
ROCE (excl. special items), % -88.7 -46.7
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In 2009, special items in the fourth quarter include impairment charges of
EUR 2 million and other charges of EUR 4 million both relating to terminated
activities. Special items of EUR 11 million in the third quarter
of 2009 relate mainly to estates of closed industrial sites in Finland.
In 2008, special items include an adjustment of EUR 5 million to sales
of disposals of 2007 and other restructuring income net of EUR 5 million.
Other operations include development units (RFID tags, the wood plastic
composite unit UPM ProFi and biofuels), logistic services and corporate
administration.
Q4 of 2009 compared with Q4 of 2008
Operating loss excluding special items was EUR 28 million (37 million).
Sales amounted to EUR 35 million (34 million).
Hedging resulted in a profit of EUR 2 million (profit of EUR 2 million). The
development units continued to incur an operating loss.
2009 compared with 2008
Operating loss excluding special items was EUR 125 million (loss of EUR 64
million). Sales amounted to EUR 111 million (200 million).
The operating loss was greater than in the comparison period, mainly due to
hedging losses of EUR 23 million (profit of EUR 24 million). The development
units continued to incur an operating loss.
Helsinki, 2 February 2010
UPM-Kymmene Corporation
Board of Directors
Financial information
This financial review is unaudited
Consolidated income statement
EUR million Q4/ Q4/ Q1-Q4/ Q1-Q4/
2009 2008 2009 2008
Sales 2,108 2,315 7,719 9,461
Other operating income 18 9 47 83
Costs and expenses -1,810 -2,227 -6,774 -8,407
Change in fair value of 9 -2 17 50
biological assets and wood harvested
Share of results of 1 -16 -95 62
associated companies and joint ventures
Depreciation, amortisation -200 -365 -779 -1,225
and impairment charges
Operating profit (loss) 126 -286 135 24
Gains on available-for-sale - - -1 2
investments, net
Exchange rate and fair value - -14 -9 -25
gains and losses
Interest and other finance 185 -60 62 -202
costs, net
Profit (loss) before tax 311 -360 187 -201
Income taxes -16 74 -18 21
Profit (loss) for the period 295 -286 169 -180
Attributable to:
Equity holders of the parent 295 -287 169 -179
company
Minority interest - 1 - -1
295 -286 169 -180
Earnings per share for profit (loss) attributable to the
equity holders of the parent company
Basic earnings per share, EUR 0.57 -0.56 0.33 -0.35
Diluted earnings per share, EUR 0.57 -0.56 0.33 -0.35
Statement of comprehensive income
EUR million Q4/ Q4/ Q1-Q4/Q1-Q4/
2009 2008 2009 2008
Profit (loss) for the period 295 -286 169 -180
Other comprehensive income
for the period, after tax:
Translation differences 115 -195 165 -206
Net investment hedge -19 61 -56 56
Cash flow hedges -13 18 -4 -33
Available-for-sale 21 - 21 -
investments
Share of other comprehensive 40 -11 30 1
income of associated companies
Other comprehensive income 144 -127 156 -182
for the period, net of tax
Total comprehensive income 439 -413 325 -362
for the period
Total comprehensive income attributable to:
Equity holders of the parent 439 -414 325 -361
company
Minority interest - 1 - -1
439 -413 325 -362
Consolidated balance sheet
EUR million 31.12.2009 31.12.2008
ASSETS
Non-current assets
Goodwill 1,017 933
Other intangible assets 423 403
Property, plant and equipment 6,192 5,688
Investment property 22 19
Biological assets 1,293 1,133
Investments in associated 553 1,263
companies and joint ventures
Available-for-sale 320 116
investments
Non-current financial assets 263 361
Deferred tax assets 287 258
Other non-current assets 211 201
10,581 10,375
Current assets
Inventories 1,112 1,354
Trade and other receivables 1,446 1,686
Income tax receivables 28 24
Cash and cash equivalents 438 330
3,024 3,394
Assets classified as held for sale - 12
Total assets 13,605 13,781
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 890 890
Translation differences -164 -295
Fair value and other reserves 141 130
Reserve for invested 1,145 1,145
non-restricted equity
Retained earnings 4,574 4,236
6,586 6,106
Minority interest 16 14
Total equity 6,602 6,120
Non-current liabilities
Deferred tax liabilities 608 658
Retirement benefit obligations 418 408
Provisions 191 191
Interest-bearing liabilities 4,164 4,534
Other liabilities 51 25
5,432 5,816
Current liabilities
Current interest-bearing liabilities 300 537
Trade and other payables 1,206 1,258
Income tax payables 65 33
1,571 1,828
Liabilities related to assets - 17
classified as held for sale
Total liabilities 7,003 7,661
Total equity and liabilities 13,605 13,781
Consolidated cash flow statement
Year ended 31 December
EUR million 2009 2008
Cash flow from operating activities
Profit (loss) for the period 169 -180
Adjustments to profit (loss) for the period 772 1,232
Interest received 6 9
Interest paid -163 -202
Dividends received 24 18
Other financial items, net -50 -41
Income taxes paid -31 -76
Change in working capital 532 -132
Net cash generated from 1,259 628
operating activities
Cash flow from investing activities
Acquisition of subsidiaries, -508 -
net of cash acquired
Acquisition of shares in associated companies -78 -19
Capital expenditure -236 -558
Proceeds from disposal of subsidiary shares,
net of cash - 6
Proceeds from disposal of 565 4
shares in associated companies
Proceeds from disposal of - 2
available-for-sale investments
Proceeds from sale of 46 33
tangible and intangible assets
Increase in non-current receivables -3 -
Net cash used in investing activities -214 -532
Cash flow from financing activities
Proceeds from non-current liabilities 325 1,083
Payments of non-current liabilities -1,051 -624
Payments of current liabilities, net -6 -153
Share options exercised - 78
Dividends paid -208 -384
Other financing cash flow - -1
Net cash used in financing activities -940 -1
Change in cash and cash equivalents 105 95
Cash and cash equivalents at 330 237
the beginning of year
Foreign exchange effect on cash 3 -2
Change in cash and cash equivalents 105 95
Cash and cash equivalents at year-end 438 330
Consolidated statement of changes in equity
Attributable to equity holders of the parent company
EUR million Share Translation Fair value and
capital differences other reserves
Balance at 1 January 2008 890 -158 193
Changes in equity for 2008
Share options exercised - - -
Share-based compensation, net of tax - - -29
Dividend paid - - -
Acquisitions and disposals - - -
Other items - - -1
Total comprehensive income - -137 -33
for the period
Balance at 31 December 2008 890 -295 130
Balance at 1 January 2009 890 -295 130
Changes in equity for 2009
Share-based compensation, net of tax - - -6
Dividend paid - - -
Acquisitions and disposals - - -
Other items - - -
Total comprehensive income - 131 17
for the period
Balance at 31 December 2009 890 -164 141
EUR million Reserve for Retained Total
invested earnings
non-restricted
equity
Balance at 1 January 2008 1,067 4,778 6,770
Changes in equity for 2008
Share options exercised 78 - 78
Share-based compensation, net of tax - 33 4
Dividend paid - -384 -384
Acquisitions and disposals - - -
Other items - - -1
Total comprehensive income - -191 -361
for the period
Balance at 31 December 2008 1,145 4,236 6,106
Balance at 1 January 2009 1,145 4,236 6,106
Changes in equity for 2009
Share-based compensation, net of tax - 12 6
Dividend paid - -208 -208
Acquisitions and disposals - 358 358
Other items - -1 -1
Total comprehensive income - 177 325
for the period
Balance at 31 December 2009 1,145 4,574 6,586
EUR million Minority Total
interest equity
Balance at 1 January 2008 13 6,783
Changes in equity for 2008
Share options exercised - 78
Share-based compensation, net of tax - 4
Dividend paid - -384
Acquisitions and disposals 2 2
Other items - -1
Total comprehensive income -1 -362
for the period
Balance at 31 December 2008 14 6,120
Balance at 1 January 2009 14 6,120
Changes in equity for 2009
Share-based compensation, net of tax - 6
Dividend paid - -208
Acquisitions and disposals 2 360
Other items - -1
Total comprehensive income - 325
for the period
Balance at 31 December 2009 16 6,602
Quarterly information
EUR million Q4/ Q3/ Q2/ Q1/ Q4/ Q3/
2009 2009 2009 2009 2008 2008
Sales 2,108 1,913 1,841 1,857 2,315 2,358
Other operating income 18 5 7 17 9 23
Costs and expenses -1,810 -1,603 -1,627 -1,734 -2,227 -1,998
Change in fair value of 9 -13 10 11 -2 4
biological assets and wood harvested
Share of results of 1 -21 -22 -53 -16 35
associated companies and joint ventures
Depreciation, amortisation -200 -185 -201 -193 -365 -462
and impairment charges
Operating profit (loss) 126 96 8 -95 -286 -40
Gains on available-for-sale - -1 - - - -
investments, net
Exchange rate and fair value - -3 3 -9 -14 -
gains and losses
Interest and other finance 185 -28 -37 -58 -60 -50
costs, net
Profit (loss) before tax 311 64 -26 -162 -360 -90
Income taxes -16 -24 18 4 74 3
Profit (loss) for the period 295 40 -8 -158 -286 -87
Attributable to:
Equity holders of the parent 295 40 -8 -158 -287 -86
company
Minority interest - - - - 1 -1
295 40 -8 -158 -286 -87
Basic earnings per share, EUR 0.57 0.08 -0.02 -0.30 -0.56 -0.17
Diluted earnings per share, EUR 0.57 0.08 -0.02 -0.30 -0.56 -0.17
Earnings per share, excluding 0.21 0.14 0.03 -0.27 -0.19 0.25
special items, EUR
Average number of shares 519,958 519,954 519,954 519,954 519,979 519,999
basic (1,000)
Average number of shares 518,876 521,036 519,954 519,954 519,979 519,999
diluted (1,000)
Special items in operating -60 -35 -23 -17 -240 -256
profit (loss)
Operating profit (loss), 186 131 31 -78 -46 216
excl. special items
% of sales 8.8 6.8 1.7 -4.2 -2.0 9.2
Special items before tax 155 -35 -23 -17 -240 -250
Profit (loss) before tax, 156 99 -3 -145 -120 160
excl. special items
% of sales 7.4 5.2 -0.2 -7.8 -5.2 6.8
Return on equity, excl. 7.4 5.0 0.8 neg. neg. 7.8
special items, %
Return on capital employed, 7.2 4.9 1.3 neg. neg. 7.7
excl. special items, %
EBITDA 362 334 238 128 178 378
% of sales 17.2 17.5 12.9 6.9 7.7 16.0
Share of results of associated companies and
joint ventures
Energy -8 -24 -4 -4 -11 -8
Pulp 7 4 -16 -47 -4 44
Forest and timber 1 -1 1 1 -1 -
Paper 1 - -1 -1 1 -
Other operations - - -2 -2 -1 -1
Total 1 -21 -22 -53 -16 35
EUR million Q2/ Q1/ Q1-Q4 / Q1-Q4 /
2008 2008 2009 2008
Sales 2,378 2,410 7,719 9,461
Other operating income 11 40 47 83
Costs and expenses -2,074 -2,108 -6,774 -8,407
Change in fair value of 20 28 17 50
biological assets and wood harvested
Share of results of 21 22 -95 62
associated companies and joint ventures
Depreciation, amortisation -199 -199 -779 -1,225
and impairment charges
Operating profit (loss) 157 193 135 24
Gains on available-for-sale 2 - -1 2
investments, net
Exchange rate and fair value -1 -10 -9 -25
gains and losses
Interest and other finance -43 -49 62 -202
costs, net
Profit (loss) before tax 115 134 187 -201
Income taxes -25 -31 -18 21
Profit (loss) for the period 90 103 169 -180
Attributable to:
Equity holders of the parent 92 102 169 -179
company
Minority interest -2 1 - -1
90 103 169 -180
Basic earnings per share, EUR 0.18 0.20 0.33 -0.35
Diluted earnings per share, EUR 0.18 0.20 0.33 -0.35
Earnings per share, excluding 0.17 0.19 0.11 0.42
special items, EUR
Average number of shares 517,622 512,581 519,955 517,545
basic (1,000)
Average number of shares 516,791 513,412 519,955 517,545
diluted (1,000)
Special items in operating 2 5 -135 -489
profit (loss)
Operating profit (loss), 155 188 270 513
excl. special items
% of sales 6.5 7.8 3.5 5.4
Special items before tax 2 5 80 -483
Profit (loss) before tax, 113 129 107 282
excl. special items
% of sales 4.8 5.4 1.4 3.0
Return on equity, excl. 5.4 5.9 1.0 3.4
special items, %
Return on capital employed, 5.7 6.5 2.5 4.6
excl. special items, %
EBITDA 313 337 1,062 1,206
% of sales 13.2 14.0 13.8 12.7
Share of results of associated companies and
joint ventures
Energy -2 -5 -40 -26
Pulp 20 26 -52 86
Forest and timber - 1 2 -
Paper - - -1 1
Other operations 3 - -4 1
Total 21 22 -95 62
Deliveries
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/
2009 2009 2009 2009 2008 2008 2008
Electricity, 1,000 MWh 2,277 2,103 1,999 2,486 2,731 2,653 2,344
Pulp, 1,000 t 550 446 391 372 421 480 527
Sawn timber, 1,000 m3 413 355 366 363 421 510 628
Publication papers, 1,000 t 1,576 1,464 1,323 1,304 1,809 1,760 1,749
Fine and speciality papers, 945 872 813 724 784 863 923
1,000 t
Paper deliveries total, 1,000t 2,521 2,336 2,136 2,028 2,593 2,623 2,672
Plywood, 1,000 m3 150 143 141 133 160 188 227
Q1/ Q1-Q4/ Q1-Q4/
2008 2009 2008
Electricity, 1,000 MWh 2,439 8,865 10,167
Pulp, 1,000 t 554 1,759 1,982
Sawn timber, 1,000 m3 573 1,497 2,132
Publication papers, 1,000 t 1,772 5,667 7,090
Fine and speciality papers, 981 3,354 3,551
1,000 t
Paper deliveries total, 1,000t 2,753 9,021 10,641
Plywood, 1,000 m3 231 567 806
Quarterly segment information
EUR million Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/
2009 2009 2009 2009 2008 2008 2008
Sales
Energy 128 108 100 136 141 129 103
Pulp 226 156 132 139 200 228 247
Forest and timber 348 295 309 385 419 475 518
Paper 1,558 1,454 1,388 1,367 1,750 1,761 1,727
Label 252 242 226 223 233 239 245
Plywood 81 73 77 75 102 121 150
Other operations 35 21 21 34 34 52 66
Internal sales -520 -436 -412 -502 -564 -647 -678
Sales, total 2,108 1,913 1,841 1,857 2,315 2,358 2,378
EBITDA
Energy 57 35 41 57 76 58 34
Pulp 53 8 -24 -55 9 38 35
Forest and timber 30 24 -15 -15 -52 -4 4
Paper 221 274 247 187 189 271 216
Label 25 29 18 6 -1 9 15
Plywood 3 -5 -5 -23 -5 3 22
Other operations -27 -31 -24 -29 -38 3 -13
EBITDA, total 362 334 238 128 178 378 313
Operating profit (loss)
Energy 47 10 36 51 62 49 31
Pulp 35 -9 -60 -122 -76 60 38
Forest and timber 21 6 -18 -18 -63 -38 17
Paper 74 126 85 60 -126 -114 60
Label 16 18 4 -3 -38 1 8
Plywood -33 -10 -10 -29 -10 -2 19
Other operations -34 -45 -29 -34 -35 4 -16
Operating profit (loss), 126 96 8 -95 -286 -40 157
total
% of sales 6.0 5.0 0.4 -5.1 -12.4 -1.7 6.6
Special items in operating profit
Energy -1 -17 - - - - -
Pulp - - - -29 -59 - -
Forest and timber -14 1 -8 -10 -2 -33 -
Paper -8 -6 -10 23 -153 -227 -
Label -1 -2 -5 - -28 - -
Plywood -30 - - -1 - - 3
Other operations -6 -11 - - 2 4 -1
Special items in operating -60 -35 -23 -17 -240 -256 2
profit, total
Operating profit (loss) excl.special items
Energy 48 27 36 51 62 49 31
Pulp 35 -9 -60 -93 -17 60 38
Forest and timber 35 5 -10 -8 -61 -5 17
Paper 82 132 95 37 27 113 60
Label 17 20 9 -3 -10 1 8
Plywood -3 -10 -10 -28 -10 -2 16
Other operations -28 -34 -29 -34 -37 - -15
Operating profit (loss) excl. 186 131 31 -78 -46 216 155
special items, total
% of sales 8.8 6.8 1.7 -4.2 -2.0 9.2 6.5
External sales
Energy 38 24 24 49 57 45 20
Pulp 34 9 10 10 6 17 18
Forest and timber 171 145 150 152 199 197 240
Paper 1,500 1,409 1,355 1,327 1,701 1,699 1,657
Label 252 243 225 222 233 238 244
Plywood 77 69 73 72 94 111 139
Other operations 36 14 4 25 25 51 60
External sales, total 2,108 1,913 1,841 1,857 2,315 2,358 2,378
Internal sales
Energy 90 84 76 87 84 84 83
Pulp 192 147 122 129 194 211 229
Forest and timber 177 150 159 233 220 278 278
Paper 58 45 33 40 49 62 70
Label - -1 1 1 - 1 1
Plywood 4 4 4 3 8 10 11
Other operations -1 7 17 9 9 1 6
Internal sales, total 520 436 412 502 564 647 678
EUR million Q1/ Q1-Q4/ Q1-Q4/
2008 2009 2008
Sales
Energy 105 472 478
Pulp 269 653 944
Forest and timber 508 1,337 1,920
Paper 1,773 5,767 7,011
Label 242 943 959
Plywood 157 306 530
Other operations 48 111 200
Internal sales -692 -1,870 -2,581
Sales, total 2,410 7,719 9,461
EBITDA
Energy 39 190 207
Pulp 57 -18 139
Forest and timber 4 24 -48
Paper 209 929 885
Label 11 78 34
Plywood 26 -30 46
Other operations -9 -111 -57
EBITDA, total 337 1,062 1,206
Operating profit (loss)
Energy 33 144 175
Pulp 67 -156 89
Forest and timber 25 -9 -59
Paper 51 345 -129
Label 3 35 -26
Plywood 21 -82 28
Other operations -7 -142 -54
Operating profit (loss), 193 135 24
total
% of sales 8.0 1.7 0.3
Special items in operating profit
Energy - -18 -
Pulp - -29 -59
Forest and timber -1 -31 -36
Paper 1 -1 -379
Label - -8 -28
Plywood - -31 3
Other operations 5 -17 10
Special items in operating 5 -135 -489
profit, total
Operating profit (loss) excl.special items
Energy 33 162 175
Pulp 67 -127 148
Forest and timber 26 22 -23
Paper 50 346 250
Label 3 43 2
Plywood 21 -51 25
Other operations -12 -125 -64
Operating profit (loss) excl. 188 270 513
special items, total
% of sales 7.8 3.5 5.4
External sales
Energy 15 135 137
Pulp 22 63 63
Forest and timber 233 618 869
Paper 1,704 5,591 6,761
Label 241 942 956
Plywood 147 291 491
Other operations 48 79 184
External sales, total 2,410 7,719 9,461
Internal sales
Energy 90 337 341
Pulp 247 590 881
Forest and timber 275 719 1,051
Paper 69 176 250
Label 1 1 3
Plywood 10 15 39
Other operations - 32 16
Internal sales, total 692 1,870 2,581
Business combinations
On 8 December 2009, UPM, Metsäliitto Cooperative, M-Real corporation and Oy
Metsä-Botnia Ab (Botnia) completed a transaction whereby UPM acquired
Botnia's and Metsäliitto's shares of the Uruguayan Fray Bentos pulp mill and
the forestry company Forestal Oriental, and whereby UPM sold approximately 30%
of shares in Oy Metsä-Botnia Ab. If the transaction had occurred on
1 January 2009, UPM's sales would have been EUR 7,923 million
and profit for the period EUR 219 million.
Purchase consideration
EUR million 2009
Cash paid 597
Transaction costs 5
Total purchase consideration 602
The assets and liabilities as of 8 December 2009
arising from the acquisition are as follows:
EUR million Fair value Fair value Acquired
of net assets adjustments carrying
acquired amount
Cash and cash equivalents 94 - 94
Goodwill - -43 43
Other intangible assets 4 - 4
Customer relationships and 43 43 -
other intangible assets
Property, plant and equipment 1,013 227 786
Biological assets 150 - 150
Investment in associated companies 3 - 3
Inventories 121 11 110
Trade and other receivables 75 - 75
Trade and other payables -68 - -68
Interest-bearing liabilities -359 - -359
Deferred income taxes -12 -10 -2
Total identifiable net assets 1,064 228 836
Minority interests -2
Asset valuation surplus and -542
cost of the prior ownership
Total acquired net assets 520
Goodwill 82
Total purchase consideration 602
Purchase consideration 602
settled in cash
Cash and cash equivalents in -94
subsidiary acquired
Cash outflow on acquisition 508
The fair value of the acquired net assets is provisional pending
on the final valuations.
Notes to the consolidated cash flow statement
Adjustments to net profit (loss)
Year ended 31 December
EUR million 2009 2008
Taxes 18 -21
Depreciation, amortisation 779 1,225
and impairment charges
Share of results in 95 -62
associated companies and joint ventures
Capital gains on sale of -235 -30
non-current assets, net
Finance costs, net 167 227
Settlement of restructuring -43 -56
charges
One-time contributions to - -85
pension funds
Other adjustments -9 34
Total 772 1,232
Change in working capital
Inventories 400 -55
Current receivables 156 138
Current non-interest bearing -24 -215
liabilities
Total 532 -132
Changes in property, plant and equipment
EUR million Q1-Q4/ Q1-Q4/
2009 2008
Book value at beginning of 5,688 6,179
period
Capital expenditure 181 471
Companies acquired 1,013 -
Decreases -20 -24
Depreciation -696 -748
Impairment charges -14 -182
Impairment reversal 5 -
Translation difference and 35 -8
other changes
Book value at end of period 6,192 5,688
Commitments and contingencies
EUR million 31.12.2009 31.12.2008
Own commitments
Mortgages and pledges 1) 1,043 787
On behalf of associated companies
and joint ventures
Guarantees for loans 8 10
On behalf of others
Other guarantees 1 2
Other own commitments
Leasing commitments for the 24 17
next 12 months
Leasing commitments for 60 56
subsequent periods
Other commitments 69 62
1) Mortgages and pledges relate mainly to Uruguayan operations, and to giving
mandatory security for borrowing from Finnish pension insurance companies.
Capital commitments
EUR million Completion Total cost By 31.12.2008
Materials recovery facility January 2011 19 -
(MRF), Shotton
Waste water treatment plant, September 2010 19 -
Blandin
Plywood development December 2011 18 -
Rebuild of debarking plant, October 2010 30 1
Wisaforest
Energy saving TMP plant, January 2011 16 -
Steyrermühl
EUR million Q1-Q4/ After
2009 31.12.2009
Materials recovery facility - 19
(MRF), Shotton
Waste water treatment plant, - 19
Blandin
Plywood development - 18
Rebuild of debarking plant, 13 16
Wisaforest
Energy saving TMP plant, - 16
Steyrermühl
Notional amounts of derivative financial instruments
EUR million 31.12.2009 31.12.2008
Currency derivatives
Forward contracts 3,791 4,598
Options, bought 20 -
Options, written 20 -
Swaps 514 508
Interest rate derivatives
Forward contracts 3,259 2,668
Swaps 2,701 2,833
Other derivatives
Forward contracts 25 172
Options, bought 73 -
Options, written 73 78
Swaps 4 8
Related party (associated companies and joint ventures)
transactions and balances
EUR million Q1-Q4/ Q1-Q4/
2009 2008
Sales to associated 114 138
companies
Purchases from associated 560 592
companies
Non-current receivables at 2 -
end of period
Trade and other receivables 23 37
at end of period
Trade and other payables at 32 27
end of period
Basis of preparation
This unaudited financial report has been prepared in accordance with the
accounting policies set out in International Accounting Standard 34 on Interim
Financial Reporting and in the Group's Consolidated Financial Statements for
2008. Income tax expense is recognised based on the best estimate of the
weighted average annual income tax rate expected for the full financial year.
The Group has adopted the following standard:
IAS 1 (Revised) Presentation of Financial Statements became effective 1 January
2009. The revised standard prohibits the presentation of items of income and
expenses (that is, 'non-owner changes in equity') in the statement of changes
in equity, requiring 'non-owner changes in equity' to be presented separately
from owner changes in equity. Entities can choose whether to present one
performance statement (the statement of comprehensive income) or two statements
(the income statement and statement of comprehensive income). Where entities
restate or reclassify comparative information, they will be required to present
a restated balance sheet as at the beginning comparative period in addition to
the current requirement to present balance sheets at the end of the current
period and comparative period. Following the adoption of the revised standard
the Group will present two separate statements (a separate income statement
followed by a statement of comprehensive income).
Calculation of key indicators
Return on equity, %:
(Profit before tax - income taxes)/ Total equity (average) x 100
Return on capital employed, %:
(Profit before tax + interest expenses and other financial expenses)/
(Total equity + interest-bearing liabilities (average)) x 100
Earnings per share:
Profit for the period attributable to equity holders of the parent company/
Adjusted average number of shares during the period excluding treasury shares
Key exchange rates for the euro at end of period
31.12.2009 30.09.2009 30.06.2009
USD 1.4406 1.4643 1.4134
CAD 1.5128 1.5709 1.6275
JPY 133.16 131.07 135.51
GBP 0.8881 0.9093 0.8521
SEK 10.2520 10.2320 10.8125
31.03.2009 31.12.2008 30.09.2008
USD 1.3308 1.3917 1.4303
CAD 1.6685 1.6998 1.4961
JPY 131.17 126.14 150.47
GBP 0.9308 0.9525 0.7903
SEK 10.9400 10.8700 9.7943
30.06.2008 31.03.2008
USD 1.5764 1.5812
CAD 1.5942 1.6226
JPY 166.44 157.37
GBP 0.7923 0.7958
SEK 9.4703 9.3970
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 71-73 of the company's annual report 2008
UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284
communications@upm-kymmene.com
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Corporate Communications
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Main media
www.upm-kymmene.com
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