UPM-Kymmene Corporation Interim Report 25 April 2013 9.35 EET
Q1/2013 compared with Q1/2012
CEO Jussi Pesonen comments on the first quarter of 2013:
”The first quarter was well in line with our expectations: steady and positive in our growth businesses, hard work and continuing challenges in Paper. Our operating profit excluding special items, at EUR 144 million, materialised close to the comparison periods (156 million in Q1 2012, 146 million in Q4 2012). The operating cash flow was EUR 103 million, which was impacted by a seasonal increase in working capital.
The performance of Plywood and Timber also improved thanks to improved cost efficiency and revised commercial strategies.
In Paper, however, the market developments were as challenging as we anticipated. The profitability of European paper business was negatively impacted by three factors: publication paper prices, adverse currency development and delivery volumes compared to the latter half of 2012.
Measures taken in 2012 resulted in EUR 30 million lower fixed costs in the first quarter of 2013 compared to last year.
The market realities are currently tough and these savings were not sufficient to offset the market impact in Paper. Therefore, we will go ahead with the restructuring and streamlining plans that we announced in January to achieve EUR 90 million annual fixed cost savings. We are permanently closing two magazine paper machines in April, one in Rauma, Finland, and one in Ettringen, Germany. The sale of the Docelles paper mill, the Pestovo sawmill and the Aigrefeuille further processing mill is also ongoing, as is the streamlining of our functions.
Economic pressure has led - and we believe will continue to lead - to structural changes that will be important for the whole industry,” said Pesonen.
Economic growth in Europe is expected to remain very low in the early part of 2013. This is having a negative impact on the European graphic paper markets in particular. The hydrological situation in the Nordic countries has normalised and the forward electricity prices for 2013 are on about the same level as the realised market prices in 2012. Growth market economies are expected to fare better, which is supportive for the global pulp and label materials markets as well as paper markets in Asia and wood products markets outside Europe.
In H1 2013, UPM’s performance will be underpinned by continued stable overall outlook for growth businesses such as Energy, Pulp and Label, as compared to H2 2012. However, slightly lower publication paper prices, adverse currency development and lower delivery volumes are having a clear negative impact on the European paper business profitability, as compared with H2 2012. UPM’s cost level is expected to be stable.
UPM's President and CEO Jussi Pesonen will present the results in a conference call and a webcast for analysts and investors (in English) on 25 April 2013 at 13:15 EET.
The conference call can be participated in either by dialing a number in the list below or following the webcast online at www.upm.com or through http://qsb.webcast.fi/u/upm/upm_2013_0425_q1/
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 74–75 of the company’s annual report 2012.
UPM News Desk
UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 22,000 people. We are present in 67 countries and have production units in 17 countries. UPM's annual sales exceed EUR 10 billion. UPM's shares are listed on the Helsinki stock exchange. UPM – The Biofore Company – www.upm.com