Summary of latest financial results


UPM Half Year Financial Report 2019: 
Margin management delivered continued earnings growth

Q2 2019 highlights

  • Sales grew by 1% to EUR 2,605 million (2,589 million in Q2 2018)
  • Comparable EBIT increased by 3% to EUR 345 million (334 million)
  • Cost environment started to moderate, fixed costs decreased mainly due to lower maintenance activity 
  • Operating cash flow increased to EUR 436 million (328 million)
  • Net debt decreased to EUR 366 million (401 million)

H1 2019 highlights

  • Sales grew by 4% to EUR 5,298 million (5,102 million in H1 2018)
  • Comparable EBIT increased by 4% to EUR 719 million (689 million)
  • Sales prices were higher, outweighing the impact of increased variable costs
  • Operating cash flow increased to EUR 756 million (542 million)
  • UPM decided to close Paper Machine 10 at UPM Plattling, Germany
Key figures Q2/2019 Q2/2018 Q1/2019 Q1
Sales, EURm 2,605 2,589 2,693 5,298 5,102 10,483
Comparable EBITDA, EURm 1) 466 442 488 954 898 1,868
  % of sales 17.9 17.1 18.1 18.0 17.6 17.8
Operating profit, EURm 319 349 373 692 734 1,895
Comparable EBIT, EURm 345 334 374 719 689 1,513
  % of sales 13.2 12.9 13.9 13.6 13.5 14.4
Profit before tax, EURm 300 337 364 664 708 1,839
  Comparable profit before tax, EURm 325 322 366 691 663 1,457
Profit for the period, EURm 245 269 304 549 577 1,496
Comparable profit for the period, EURm 271 258 305 576 545 1,194
Earnings per share (EPS), EUR 0.46 0.50 0.57 1.03 1.08 2.80
  Comparable EPS, EUR 0.51 0.48 0.57 1.08 1.02 2.24
Return on equity (ROE), % 10.0 12.1 12.3 11.4 13.3 16.2
Comparable ROE, % 11.1 11.6 12.3 11.9 12.5 12.9
Return on capital employed (ROCE), % 11.2 14.2 13.6 12.8 14.9 18.4
Comparable ROCE, % 12.2 13.6 13.7 13.3 14.0 14.6
Operating cash flow, EURm 1) 436 328 320 756 542 1,330
Operating cash flow per share, EUR 1) 0.82 0.61 0.60 1.42 1.02 2.49
Equity per share at end of period, EUR 17.91 16.37 18.84 17.91 16.37 18.36
Capital employed at the end of period, EURm 10,820 9,691 11,318 10,820 9,691 10,575
Net debt at the end of period, EURm 366 401 -5 366 401 -311
Net debt to EBITDA (last 12 m.) 0.19 0.22 0.00 0.19 0.22 -0.17
Personnel at the end of period 19,760 19,836 19,008 19,760 19,836 18,978
1) The 2018 comparative figures have been restated due to accounting policy change of forest renewal costs.  

Jussi Pesonen, President and CEO, comments on Q2 2019 results:

“The second quarter of the year marked the 25th consecutive quarter of increased earnings for UPM. This is a remarkable achievement, all the more so as economic growth remains modest, particularly in Europe. UPM has the tools to drive results in changing market conditions. Our operating model has enabled us to maintain good margins, which has had a favourable impact on our earnings. During the quarter, the cost environment started to moderate, too.

Our sales grew by 1% and comparable EBIT increased by 3% to EUR 345 million. Operating cash flow was strong, at EUR 436 million. Our balance sheet is truly industry leading. In the second quarter, we paid a dividend of EUR 693 million, and net debt at the end of the quarter was EUR 366 million.

UPM Biorefining reported a stronger second quarter than last year despite lower pulp prices. There was a consistent customer demand for pulp and our deliveries increased compared with the same quarter last year. Biofuels saw strong customer demand and performed very well. Maintenance activity was significantly lower than last year.

UPM Communication Papers reported a solid result. Prices remained at a good level, but the second quarter result was held back by the impact of reducing inventories. The development of paper demand in Europe has been somewhat weaker than last year. To ensure competitiveness, UPM Communication Papers is maintaining stringent cost control and asset optimisation. The closing of PM10 at UPM Plattling, Germany, was finalised in July, and the conversion of PM2 at UPM Nordland, Germany, continues.

UPM Raflatac reported stable earnings. Sales growth continued, although the slow economic environment, particularly in Europe, is impacting the demand for labels. Raflatac is continuing the fixed-cost reduction programme it started earlier in the year.

UPM Specialty Papers was able to recover earnings due to lower pulp costs, solid customer demand and slightly improved prices in the Asian fine paper markets. To stay on this track, Specialty Papers is continuing its cost management and product development initiatives. In addition, the ongoing investments at UPM Nordland and UPM Changshu are progressing well and will support our growth in a highly competitive way as of next year.

UPM Energy had an excellent quarter with a perfect combination of higher hydropower and nuclear power generation volumes, higher electricity sales prices and lower costs.

UPM Plywood maintained its profitability. Production at the UPM Chudovo, Russia, plywood mill expansion will commence during the third quarter, further improving the competitiveness of the business.

UPM is in great shape, competitive and financially strong. Our strategic spearheads for growth and transformative projects provide us with significant long-term opportunities for value creation and earnings growth.

Preparations for the new world-class pulp mill in Uruguay are progressing towards a potential investment decision. Initial works on the central railway have been started and financing of the railway construction consortium is proceeding but is yet to be finalised. In UPM Biochemicals and in UPM Biofuels our work on preparing growth initiatives continues.

UPM is ready to seize the opportunities offered by bioeconomy. We firmly believe in growing sustainable businesses that offer solutions to global challenges. Our innovations create value and business opportunities for an era in which the world is no longer dependent on fossils.”

Outlook for 2019

The global economic growth is estimated to continue in 2019, albeit at a slower pace than in 2018. There are, however, significant uncertainties related to this, including trade negotiations between China and the US, growth in China, the undefined nature of Brexit and political uncertainties in several countries. These issues may have an impact on the global economic growth and on UPM’s product and raw material markets during 2019.

UPM reached record earnings in 2018. UPM’s business performance is expected to continue at a good level in 2019. In 2019, demand growth is expected to continue for most UPM businesses, albeit at a modest pace. Demand decline is expected to continue for UPM Communication Papers.

In H2 2019, pulp prices globally are expected to be lower than in H1 2019. Paper prices in Europe and North America are expected to be moderately lower. Also input costs are expected to decrease in H2 2019 compared with H1 2019. UPM will continue measures to reduce both variable and fixed costs.

Fair value increases of forest assets are not expected to contribute materially to comparable EBIT in 2019.


Investor Relations contacts: +358 (0)204 15 0033, ir@upm.com