UPM-Kymmene Corporation Interim report 6 August 2013 at 09:30 EET Growth businesses continue to perform well, w eak quarter for Paper in Europe Q2/2013 (compared with Q2/2012) • Earnings per share excluding special items was EUR 0.20 (0.16), and reported EUR 0.22 (0.39) • Operating profit excluding special items was EUR 138 million, 5.5% of sales (128 million, 4.9%) • EBITDA was EUR 258 million, 10.2% of sales (325 million, 12.3% of sales) • Fixed costs were EUR 36 million lower than last year.
Q1–Q2/2013 (compared with Q1–Q2/2012) • Earnings per share excluding special items was EUR 0.38 (0.38), and reported EUR 0.31 (0.62) • Operating profit excluding special items was EUR 282 million, 5.6% of sales (284 million, 5.4%) • EBITDA was EUR 542 million, 10.9% of sales (682 million, 13.0% of sales) • Operating cash flow was EUR 187 million (360 million), impacted by a temporary increase in working capital.
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. CEO Jussi Pesonen comments on the second quarter of 2013: “The second quarter was in line with our expectations: growth businesses continued to perform well, whereas Paper was impacted by lower delivery volumes and prices in Europe. Our operating profit excluding special items was EUR 138 million (128 million). Operating cash flow was lower than Q2 last year due to a temporary increase in working capital. Our Pulp business experienced a strong quarter, with good delivery volumes and increased prices. In Label, our growth actions resulted in increased volumes, more than offsetting the increased fixed costs caused by expanded operations. In Energy, profitability continued to be strong, despite being impacted by lower hydropower volumes. Plywood and Timber continued on a positive track despite the challenges of European markets. Paper experienced what we believe will prove to be the weakest quarter in 2013. Profitability continued on a good level in our Chinese and speciality paper operations, but sales margins in our European graphic paper business as well as export business were significantly lower than last year. In Q2, our Paper business also suffered a significant negative impact from unrealised energy hedges, especially when compared with Q1 2013. The implementation of the fixed cost savings measures and capacity closures announced in January 2013 are on schedule. The announced capacity closures were concluded in Rauma, Finland and Ettringen, Germany, by the end of April. At this point, employee negotiations have been concluded in all countries except for France, where they started in July. By the end of Q2, 40% of the annualised cost savings had materialised. Along with other cost savings, this offsets the earnings impact from lower paper deliveries, but could not compensate for the lower sales margins. It is clear that we need to take action to improve our performance and make sure that the company continues to transform. In Label we introduced business-specific efficiency improvement measures in July,” Pesonen concludes. Outlook for 2013 Economic growth in Europe is expected to remain very low in the latter part of 2013. This will continue to have a negative impact on the European graphic paper markets in particular. 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. The current hydrological situation in the Nordic countries is slightly weaker than the long-term average. The forward electricity prices in Finland for the rest of 2013 are slightly lower than the realised market prices in H1 2013. Capital expenditure for 2013 is forecast to be approximately EUR 400 million. Conference call and press conference UPM's President and CEO Jussi Pesonen will present the results in a conference call and a webcast for analysts and investors, held in English language, on 6 August 2013 at 13:15 EET. Later in the afternoon, UPM's President and CEO Jussi Pesonen will present the results in a press conference held in Finnish language at UPM Group Head Office in Helsinki (main entrance, Eteläesplanadi 2) on 6 August 2013 at 14:30 EET. Conference call details: The conference call can be participated in either by dialling a number in the list below or following the webcast online at www.upm.com or through this link. Only participants who wish to ask questions in the conference call need to dial in. All participants can view the webcast presentation online. The presentation is available at www.upm.com for 12 months after the call. We recommend that participants start dialling in 5-10 minutes prior to ensure a timely start of the conference. Conference call title: UPM Q2 Interim Report January - June 2013 PIN: 306858# DIRECT TELEPHONE NUMBERS: Participant - Belgium: +32 2 404 0642 Participant - Denmark: +45 3544 5579 Participant - Finland: +358 9 8171 0462 Participant - France: +33 1 7072 2026 Participant - Norway: +47 2350 0204 Participant - Sweden: +46 8 5055 6477 Participant - UK: +44 20 3364 5372 Participant - US: 855 716 1589 INTERNATIONAL TELEPHONE NUMBERS WITH PIN: Participant - Australia: +61 2 8073 0498 Participant - Austria: +43 1 928 6161 Participant - Switzerland: +41 44 580 65 22 Participant - Germany: +49 69 2017 44 210 Participant - Spain: +34 914 142 009 Participant - Hong Kong: +852 580 83239 Participant - India: +91 22-3301 9422 Participant - Ireland: +353 1 447 5418 Participant - Italy: +39 02 3600 6663 Participant - Japan: +81 3 5050 5409 Participant - Netherlands: +31 20 716 80 20 Participant - Singapore: +65 3158 2497 ** 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-Kymmene Corporation UPM Media 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
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