UPM-Kymmene Corporation Interim Report 27 October 2015 at 9:40 EET
Interim Report Q3/2015:
Momentum for improvement continues: UPM shows improved Q3 earnings, cash flow and balance sheet
Q3 2015 compared with Q3 2014
· Earnings per share excluding special items were EUR 0.76 (0.32) and reported EUR 0.77 (0.34)
· Operating profit excluding special items was EUR 507 million, 20.0% of sales (235 million, 9.7% of sales)
· Operating profit excluding special items includes a fair value increase of biological assets in Finland
totalling EUR 265 million, due to adjusted long-term wood price estimates and a change in the discount
· The profit improvement programme proceeded ahead of schedule, reaching a cost reduction impact of EUR 36 million in Q3 2015 (annualised EUR 144 million)
· Operating cash flow was strong at EUR 363 million (300 million)
Q1-Q3 2015 compared with Q1-Q3 2014
· Earnings per share excluding special items were EUR 1.38 (0.85) and reported EUR 1.36 (0.95)
· Operating profit excluding special items was EUR 938 million, 12.4% of sales (617 million, 8.4% of sales)
· Growth projects progressed well, dividends increased to EUR 373 million (319 million) and net debt decreased to EUR 2,465 million (2,726 million)
· UPM started ramping up the expanded Kymi Pulp mill in Q3, started commercial deliveries of advanced
renewable diesel and completed the UPM Raflatac expansions in Poland and APAC in Q2 2015
· UPM closed 800,000 tonnes of graphic paper production capacity in Europe in Q1-Q2 2015
|Key figures||Q3/2015 (2||Q3/2014||Q2/2015||Q1-Q3/2015 (2||Q1-Q3/2014||Q1-Q4/2014|
|EBITDA, EURm 1)||345||344||317||987||972||1,306|
|% of sales||13.6||14.2||12.4||13.0||13.2||13.2|
|Operating profit (loss), EURm||513||236||206||922||603||674|
|excluding special items, EURm||507||235||227||938||617||847|
|% of sales||20.0||9.7||8.9||12.4||8.4||8.6|
|Profit (loss) before tax, EURm||498||214||182||861||610||667|
|excluding special items, EURm||492||213||203||877||558||774|
|Profit (loss) for the period, EURm||408||182||160||723||504||512|
|Earnings per share, EUR||0.77||0.34||0.30||1.36||0.95||0.96|
|excluding special items, EUR||0.76||0.32||0.33||1.38||0.85||1.17|
|Operating cash flow per share, EUR||0.68||0.57||0.61||1.49||1.47||2.33|
|Equity per share at end of period, EUR||14.89||14.33||14.30||14.89||14.33||14.02|
|Gearing ratio at end of period, %||31||36||35||31||36||32|
|Net interest-bearing liabilities at end of period, EURm||2,465||2,726||2,635||2,465||2,726||2,401|
1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in fair value of biological assets and wood harvested, excluding the change in fair value of unrealised cash flow and commodity hedges, excluding the share of results of associated companies and joint ventures, and special items.
2) Includes a fair value increase of biological assets in Finland totalling EUR 265 million, due to adjusted long-term wood price estimates and a change in the discount rate.
Jussi Pesonen, President and CEO comments on the results:
"UPM's performance continued to improve during the third quarter. This was visible in our earnings, cash flow and balance sheet. The results were boosted by our successful profit improvement programme, which proceeded ahead of schedule. During the third quarter, we achieved 96 percent of targeted savings.
Most of our businesses enjoyed a positive third quarter. UPM Biorefining performed well on favourable pulp markets and showed good cost efficiency. UPM Energy benefited from a good volume of hydropower, which it was able to leverage on volatile markets. UPM Raflatac continued to improve its performance and was able to respond to market growth with timely growth investments. UPM Plywood continued on a strong path.
UPM Paper ENA improved from the previous quarter thanks to lower costs and seasonally higher volumes. UPM Paper Asia also improved slightly from the second quarter. Both paper businesses continued to be negatively affected by currency hedges.
Our growth investment programme is nearing completion and our focus turns to reaping the benefits in 2016 and beyond. As for major projects, Kymi pulp mill expansion started the ramp-up and investment in the new UPM Changshu production unit is being finalised as we speak. In order to secure the positive volume development in pulp, we also plan to make minor investments in UPM Fray Bentos pulp mill in conjunction with the annual maintenance shutdown during the fourth quarter.
Overall, I'm encouraged by our performance during the third quarter. Our efficiency has increased and our growth projects are responding to market demand, so we're well-positioned to increase our bottom line going forward".
Outlook for 2015
UPM confirms its full year 2015 outlook:
The improved profitability achieved in 2014 is expected to continue in 2015, and there are prospects for further improvement. Profitability is underpinned by the EUR 150 million profit improvement programme,
favourable currencies, 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 compared to 2014.
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 27 October 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:
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 Interim Report January - September 2015
Direct telephone numbers:
DK: +45 823 331 78
FI: +358 981 710 495
FR: 0805 980 143
NO: +47 235 002 11
SE: +46 8 566 427 02
UK: +44 203 194 05 52
US: +1 855 716 15 97
International telephone numbers with a pin code 447217#
AU: +61 284 058 533
AT: +43 192 804 93
CH: +41 225 802 994
CN: +86 400 681 5424
DE: +49 211 971 900 76
ES: +34 911 140 089
HK: +85 230 773 566
IN: +91 226 187 51 56
IR: +353 144 756 82
IT: +39 023 601 38 09
JP: +81 344 556 491
NL: +31 207 095 111
SP: +65 642 983 39
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 76-77 of the company's annual report 2014.
Executive Vice President, Stakeholder Relations
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