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  • Interim report Q4/2014: UPM reports strong earnings momentum, record strong balance sheet

Interim report Q4/2014: UPM reports strong earnings momentum, record strong balance sheet

Stock Exchange Release 3.2.2015 9:35 EET

UPM-Kymmene Corporation Financial statements release 3 February 2015 at 9:35 EET

Interim report Q4/2014: UPM reports strong earnings momentum, record strong balance sheet

Q4 2014 compared with Q4 2013

· Earnings per share excluding special items were EUR 0.32 (0.27), and reported EUR 0.01 (0.06)
· Operating profit excluding special items increased to EUR 230 million, 9.1% of sales (207 million, 8.0% of sales)
· UPM announced a new profit improvement programme, targeting annualised EUR 150 million impact by the end of 2015
· Net debt decreased to the record-low level of EUR 2,401 million (3,040 million)
· The UPM Lappeenranta Biorefinery started commercial production of advanced renewable diesel in January 2015

Full year 2014 compared with 2013

· Earnings per share excluding special items were EUR 1.17 (0.91), and reported EUR 0.96 (0.63)
· Operating profit excluding special items increased to EUR 847 million, 8.6% of sales (683 million, 6.8% of sales), due to the success of the EUR 200 million profit improvement programme
· Growth projects in pulp, labelling materials and self-adhesive labels proceeded well and will be completed during 2015
· Operating cash flow was strong at EUR 1,241 million (735 million)
· The Board proposes an increased dividend of EUR 0.70 (0.60) per share

Key figures Q4/2014 Q4/2013 Q3/2014 Q1-Q4/2014 Q1-Q4/2013
Sales, EURm 2,531 2,588 2,415 9,868 10,054
EBITDA, EURm 330 302 346 1,287 1,155
% of sales 13.0 11.7 14.3 13.0 11.5
Operating profit (loss), EURm 71 134 236 674 548
excluding special items, EURm 230 207 235 847 683
% of sales 9.1 8.0 9.7 8.6 6.8
Profit (loss) before tax, EURm 57 115 214 667 475
excluding special items, EURm 216 188 213 774 610
Profit (loss) for the period, EURm 8 36 182 512 335
Earnings per share, EUR 0.01 0.06 0.34 0.96 0.63
excluding special items, EUR 0.32 0.27 0.32 1.17 0.91
Return on equity, % 0.4 1.9 9.7 6.9 4.5
excluding special items, % 9.2 7.5 9.1 8.3 6.4
Operating cash flow per share, EUR 0.86 0.49 0.57 2.33 1.39
Equity per share at end of period, EUR 14.02 14.08 14.33 14.02 14.08
Gearing ratio at end of period, % 32 41 36 32 41
Net interest-bearing liabilities at end of period, EURm 2,401 3,040 2,726 2,401 3,040

Jussi Pesonen, President and CEO, comments on Q4 and full year 2014 results:

"UPM showed good performance in the fourth quarter of 2014, finishing the year with strong earnings momentum. In 2014, our operating profit improved by 24% year-on-year thanks to the successful actions we have taken to improve profit. Return on equity excluding special items was 8.3% for the full year and operating cash flow per share was EUR 2.33.

I'm especially pleased with our excellent cash flow. Following the consistently strong cash flow, our balance sheet at the end of 2014 was stronger than ever in the company's history.

All six UPM business areas performed well in 2014 and four of them reached or exceeded their long-term return targets.

Year 2014 also contained several milestones in UPM's growth projects. The expansion projects in pulp, labelling materials and self-adhesive labels that were started in 2014 are all well on track and will be completed during 2015. The Lappeenranta Biorefinery started commercial production of advanced renewable diesel in January 2015 - a historic moment after eight years of R&D, piloting and construction.

Today, UPM's Board of Directors decided on a new dividend policy targeting a dividend of 30-40% of UPM operating cash flow per share. Based on this policy, the Board's proposal for the 2014 dividend is EUR 0.70 per share.

With good performance in our businesses, strong cash flow and a leading balance sheet in the industry, we are in a unique position to be able to simultaneously distribute an attractive dividend, implement focused growth projects and act on strategic opportunities."

Outlook for 2015

The improved profitability achieved in 2014 is expected to continue in 2015, and we have prospects to improve further. Our profitability is underpinned by the EUR 150 million profit improvement programme, as well as the first positive impacts from the company's growth projects. Profitability is affected by lower publication paper prices and lower electricity sales prices in the beginning of the year. The current weakened euro and lower oil price are supportive for the company's earnings.

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 3 February 2015 at 13:15 EET.

Later in the afternoon, Jussi Pesonen will present the results in a press conference held in Finnish language at the UPM Group Head Office (The Biofore House) in Helsinki, Alvar Aallon katu 1, at 14:30 EET.

Conference call and webcast details:

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 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. We recommend that participants start dialing in 5-10 minutes prior to ensure a timely start of the conference.

The presentation is available at www.upm.com for 12 months after the call.

Conference call title: UPM - Financial Statements for the year 2014

Direct telephone numbers:

FI: +358 9817 10495
UK: +44 2031 940552
NO: +47 2350 0211
SE: +46 8566 42702
US: +18 55716 1597
International telephone numbers with a pin:

AU: +61 2840 58533
AT: +43 1928 0493
CH: +41 2258 02994
DE: +49 2119 7190 076
ES: +34 9111 40089
HK: +85 2307 73566
IN: +91 2261 8751 56
IT: +39 0236 0138 09
JP: +81 3445 56491
NL: +31 2070 95111
BE: +32 2402 9661
DK: +45 3544 5574
FR: +33 1707 50706
PIN: 160387#

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 73-74 of the company's annual report 2013.

UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations

UPM, Media Desk
9.00-16.00 EET
tel. +358 40 588 3284http://www.upm.com/EN/MEDIA/All-news/Pages/Interim-report-Q42014-UPM-reports-strong-earnings-momentum,-record-strong-balanc-001-Tue-03-Feb-2015-09-36.aspx

Through the renewing of the bio and forest industries, UPM is building a sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Paper Asia, UPM Paper Europe and North America and UPM Plywood. Our products are made of renewable raw materials and are recyclable. We serve our customers worldwide. The group employs around 20,000 people and its annual sales are approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM - The Biofore Company - www.upm.com