(UPM, Helsinki, 1 February 2012 at 09.30) – Financial Statements 2011:
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.
Prices of all production inputs increased substantially compared to 2010 but we succeeded in raising prices to cover the cost increases.
However, during the latter part of the year the deterioration of pulp prices and lower demand for paper and wood products had a clear impact on our profitability. In the label market the weak demand was evident in Europe but solid development continued in other markets.
Demand weakened during the fourth quarter, but we were able to maintain stable sales prices in most businesses with the exception of Pulp and Timber. Raw material market prices started to decline towards the end of the year, but our variable costs still remained on a high level during the last quarter of 2011.
The major strategic signpost in 2011 was the Myllykoski acquisition. The transaction, the integration and the restructuring have all proceeded in line with our plans. The consolidation and the consequent restructuring have improved our cost position on the paper markets. Also, our customer offering in paper has been enhanced. Targeted synergy benefits are well on the way to being successfully implemented and this will start to be visible as of the first quarter of 2012.
Although our markets have been affected by the uncertainties in the world economy, UPM’s outlook into the first half of 2012 is fairly stable. We are in a good position to proceed with the next steps in our Biofore strategy,” says Pesonen.
Global economic growth is expected to continue in 2012. In Europe, however, the on-going sovereign debt crisis introduces uncertainty to the economic outlook. Economists estimate that the Euro zone will experience a mild recession in the early part of 2012.
In UPM’s businesses, market conditions are estimated to have stabilised. While the second half of 2011 was characterised by weakening demand, the demand and price outlook for UPM’s products is broadly stable for early 2012 compared with late 2011, taking into account seasonal variations.
Costs are expected to decrease in the early part of 2012 from the fourth quarter of 2011. Raw material market prices started to decrease during the fourth quarter and this is expected to result into slightly lower variable costs in the first quarter of 2012 compared with the fourth quarter of 2011.
Operating profit in the first half of 2012, excluding special items, is expected to be at around the same level as in second half of 2011.
Capital expenditure for 2012 is forecast to be around EUR 350 million.
Webcast and press conference:
UPM's President and CEO Jussi Pesonen will present the Annual Results 2011 in a conference call and webcast for analysts and investors, held in English language, on 1 February at 13:00 Finnish time (11:00 BST, 06:00 EST).
Later in the afternoon, UPM's President and CEO Jussi Pesonen will present the Annual results 2011 in a press conference held in Finnish language at UPM Group Head Office in Helsinki (main entrance, Eteläesplanadi 2) on 1 February, at 14:30 Finnish time (12:30 GMT, 07:30 EST).
Conference call and webcast details:
The conference call can be joined either by dialling a number in the list below or following the webcast online at www.upm.com . 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 to the conference.
Conference call title: UPM Financial Review 2011
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 86–88 of the company’s annual report 2010.