Summary of latest financial results


UPM Interim Report Q1 2022:
Strong performance supported by tight markets

Q1 2022 highlights

  • Sales increased by 12% to EUR 2,507 million (2,234 million in Q1 2021)
  • Comparable EBIT was in line with last year at EUR 277 million, 11.0% of sales (279 million, 12.5%)
  • Operating cash flow was EUR 12 million (217 million) 
  • Net debt increased to EUR 837 million (83 million) and net debt to EBITDA ratio was 0.46 (0.06)
  • Sales prices increased in all business areas and more than offset the negative impact of higher variable costs
  • The strike in Finland affected production and delivery volumes especially in the pulp, paper and biofuels businesses
  • Cash funds and unused committed credit facilities totalled EUR 2.9 billion at the end of Q1 2022
  • Transformative growth projects in Uruguay and in Germany proceed well, investment estimate updated for the Leuna biorefinery
  • UPM decided to suspend its deliveries to Russia, purchasing of wood in Russia and the UPM Chudovo plywood mill operations
  • In April, UPM and Paperworkers’ Union agreed on first-ever business-specific collective labour agreements and the strike ended at UPM mills in Finland

Key figures

  Q1/2022 Q1/2021 Q4/2021 Q1–Q4/2021
Sales, EURm         2,507         2,234         2,673         9,814
Comparable EBITDA, EURm         377         389         470         1,821
% of sales         15.0         17.4         17.6         18.6
Operating profit, EURm         183         279         415         1,562
Comparable EBIT, EURm         277         279         461         1,471
% of sales         11.0         12.5         17.2         15.0
Profit before tax, EURm         179         272         420         1,548
Comparable profit before tax, EURm         273         272         466         1,457
Profit for the period, EURm         139         227         340         1,307
Comparable profit for the period, EURm         232         228         373         1,204
Earnings per share (EPS), EUR         0.25         0.42         0.63         2.41
Comparable EPS, EUR         0.42         0.42         0.69         2.22
Return on equity (ROE), %         5.0         9.7         12.6         12.7
Comparable ROE, %         8.4         9.7         13.8         11.7
Return on capital employed (ROCE), %         5.8         9.5         12.7         12.4
Comparable ROCE, %         8.5         9.5         14.1         11.7
Operating cash flow, EURm         12         217         406         1,250
Operating cash flow per share, EUR         0.02         0.41         0.76         2.34
Equity per share at the end of period, EUR         20.11         17.06         20.34         20.34
Capital employed at the end of period, EURm         13,840         11,933         13,759         13,759
Net debt at the end of period, EURm         837         83         647         647
Net debt to EBITDA (last 12 months)         0.46         0.06         0.35         0.35
Personnel at the end of period         16,843         17,670         16,966         16,966

Jussi Pesonen, President and CEO, comments on the Q1 results:

“Market demand was strong and UPM businesses performed well. We delivered good Q1 results, on par with the corresponding quarter of last year. Prices increased significantly in all our businesses, more than offsetting the rise in variable costs. The result is a good achievement when viewed against the background of the strikes that took place at most of our Finnish mills and the war in Ukraine.

Quarterly sales increased by 12% to EUR 2,507 million, and comparable EBIT was in line with last year at EUR 277 million, 11.0% of sales. Operating cash flow was EUR 12 million, impacted by inflation and energy-related items in working capital. Net debt at the end of March was EUR 837 million. Cash funds and unused committed credit facilities totalled EUR 2.9 billion. Our strong liquidity and balance sheet are a great strength considering our ongoing transformative growth investments and the unpredictability of the operating environment.

Prices increased in all UPM businesses and the upward trend in market prices continued also for UPM Fibres. Our Uruguay pulp mill and UPM Timber performed very well. However, with two-thirds of our pulp production down because of the strikes in Finnish mills, the business area result was modest in the current markets.

UPM Communication Papers returned to profitable numbers, thanks to tight market as well as timely and successful commercial execution. The business experienced a steep rise in input costs, particularly energy, but was able to increase sales prices accordingly. A third of our graphic paper capacity was down because of the strike in Finland, but UPM Communications Papers was able to cover deliveries partially from existing stock and the mills outside of Finland.

The market for UPM Specialty Papers’ release liner and packaging paper continued to be good, and prices increased. However, our delivery volumes were lower than usual due to the strikes in Finland. Fine paper prices increased in Asia. High input costs were met with mitigating actions.

UPM Raflatac’s underlying demand and margins continued to be healthy despite significantly higher raw material, energy and logistics costs. Q1 comparable EBIT includes a EUR 13 million provision for expected credit losses related to business in Russia. Delivery volumes decreased as the strikes in Finland caused raw material shortages and production curtailments.

UPM Plywood achieved another record quarter in earnings, thanks to strong demand and high sales prices. The new business-specific collective labour agreement signed in December improved flexibility in production in our Finnish mills. This is particularly important in the current strong markets with declining Russian volumes.

UPM Energy reported strong Q1 results, thanks to continued high prices in the Finnish price area. However, Finnish prices and the business area result came down from the record high levels of Q4. The OL3 nuclear power plant unit was connected to the national grid in March and production is rising steadily. Once the unit starts regular commercial operations in Q3, it will markedly increase UPM’s CO2 free electricity generation. In addition, this will improve Finland's self-sufficiency regarding electricity.

In other operations, UPM Biofuels had no production or deliveries because of the strikes in Finland. The market for advanced renewable fuels continued to be strong.

The geopolitical environment in Europe has changed dramatically after Russia’s attack on Ukraine. Consequently, the uncertainties related to European and world economy have increased significantly. Our primary concern are the people suffering from the war, and we have started delivering humanitarian and material aid to Ukraine. UPM ceased its deliveries to Russia and wood sourcing in and from Russia. We also decided to dial down production in our Chudovo plywood mill.

The Paperworkers' Union's long strike at UPM Pulp, UPM Communication Papers, UPM Specialty Papers, UPM Raflatac and UPM Biofuels units in Finland affected our Q1 production volumes greatly. Business-specific collective labour agreements were reached on 22 April, and we are currently ramping up production in the affected mills. Our plywood mills and sawmills have operated as usual during the first quarter.

We entered this negotiation round with a long-term view to ensure the future competitiveness of our businesses. We achieved our goal, seven business-specific agreements, that improve productivity while at the same time offer competitive terms for our employees. In Finland we have more than 6,000 employees and nearly EUR 10 billion of assets. We have the responsibility for enabling our people and businesses prosper in this country. Business-specific collective labour agreements play a key role in this. The new agreements will improve the flexibility of our units and provide opportunities for investments. Improved competitiveness will ultimately benefit our customers, too.

At the same time, we have attractive major growth projects under construction in Uruguay and Germany, and under consideration in the Netherlands. The projects are an important part of our strategy, enabling future value creation and earnings growth.

The pulp mill project in Paso de los Toros is progressing well towards its start-up by the end of Q1 2023. With the very competitive cash cost level of USD 280 per delivered tonne of pulp, the mill will bring significant earnings growth once up and running.

The biochemicals refinery project in Leuna is now also progressing well. We have finalised a new investment estimate of EUR 750 million for the project, considering the scheduled ramp-up by the end of 2023 and the current high-cost environment. Supported by high customer demand, the investment case for the project is attractive and the long-term growth strategy for the biochemicals business looks increasingly appealing. Thus, we already have a team in place planning for the next growth steps beyond the first refinery in Leuna.

In biofuels, the basic engineering phase of a potential new biorefinery is continuing at full pace, now focusing on the site in Rotterdam. The demand for climate solutions is clearly on the rise. At the same time, the dramatically changed geopolitical situation has further underlined the need to rapidly find alternatives for fossil fuels. I believe that UPM can play an important role in decarbonising society and creating a future beyond fossils.

As the latest example of UPM’s commitment to sustainability, in March we published the Forest Action Programme that will run until 2030. This programme is steering our global wood sourcing operations and covers our forests in Finland and the United States as well as plantations in Uruguay. Forest Action pushes us beyond current standard requirements and its measures will have a positive impact on all fundamental aspects of sustainable forestry: climate, biodiversity, soil, water and social contribution. By taking concrete actions, we can make the 2020s a decade of sustainable growth."

Outlook for 2022

UPM’s earnings recovered to the strong pre-pandemic level in 2021 and overall, 2022 is expected to be another good year for the company.

There are significant uncertainties in the outlook for 2022, related to the war in Ukraine, the ongoing pandemic, growth in the European and global economy, the energy market situation in Europe and the tight raw material and logistics markets.

Good demand is expected to continue for most UPM products in 2022. In the first half of the year, production and earnings are affected by the strike at the Finnish units of UPM Pulp, UPM Biofuels, UPM Raflatac, UPM Specialty Papers and UPM Communication Papers, and the two scheduled pulp mill maintenance shutdowns in Finland in Q2.

Sales prices and variable costs are expected to increase in most of UPM businesses in H1 2022. UPM will continue to manage margins with product pricing, optimising its product and market mix, efficient use of assets as well as by taking measures to improve variable and fixed cost efficiency.

UPM’s comparable EBIT in H1 2022 is expected to be on similar level compared to H1 2021. Comparable EBIT in the full year 2022 is expected to be on similar level or higher than in 2021.

Impact of COVID-19 pandemic

The COVID-19 pandemic, the related containment measures around the world and the rapid changes in the global economy continue to represent significant uncertainty.

Global economy

The COVID-19 pandemic and the related containment measures resulted in a sharp decline in the global economy in 2020. In 2021, the global economy started to recover, but it is uncertain how long-lasting the recovery will be. Despite progress with vaccinations, additional waves of the epidemic in different parts of the world remain possible.

The recovery of the global economy from the deep downturn in 2020, combined with the ongoing pandemic has created tightness and disruptions globally in many supply chains, including logistics and energy, causing rising costs and uncertainty on the price and availability of many raw materials and energy.

Safety and business continuity

UPM has implemented extensive precautions to protect the health and safety of its employees and to ensure business continuity and the progression of its strategic projects during the pandemic. Despite these efforts, the operation of one or more units or the supply chain and logistics could be temporarily disrupted during the pandemic, the related lockdown measures, or the following economic recovery. In these circumstances some units may need to limit operations or be temporarily shut down. So far UPM has been able to protect its business continuity well.

Demand for UPM products

Many of UPM's products serve essential everyday needs and have therefore seen resilient demand during the crisis. These products include pulp, specialty papers and self-adhesive label materials. However, even in these businesses, demand is influenced by general economic activity. 

Demand for graphic papers is more prone to be impacted by the lockdowns and economic cycles. Lockdowns limit a wide range of consumer-driven services and retail, as well as work at the office. This has had a negative impact on printed advertising and graphic paper demand during the pandemic.

Lockdowns and the level of economic activity may also influence demand for electricity, plywood and sawn timber.

In 2020, graphic paper demand in Europe decreased by 18% from the previous year, particularly as advertising-driven paper consumption and office paper demand being impacted by the lockdowns across Europe. In 2021, as economies in Europe started to gradually open, graphic paper demand increased by 4% compared the previous year.

Pulp demand has held up relatively well, supported by good demand for tissue and hygiene products as well as for some packaging and specialty paper products. Pulp consumption in graphic paper production decreased in 2020 but improved in 2021.

Demand for self-adhesive label materials and specialty papers has grown during the pandemic, as consumers have shifted some of their spending from away-from-home categories to packaged daily consumer goods. E-commerce has continued to grow, supporting some labelling and specialty paper applications. 

Adjusting to different scenarios

The potential impacts on UPM are likely to differ by business and phase and waves of the pandemic, lockdown measures, changes in consumer behaviour, and the recession and recovery thereof. UPM has used shift arrangements, temporary lay-offs, or reduced working hours as required to adjust its operations in different scenarios.

Projects and maintenance shutdowns

The pandemic and the required health and safety measures add challenges to large investment projects and maintenance shutdowns. UPM's transformative pulp project in Uruguay and biochemicals project in Germany are proceeding with strict health and safety controls. Despite these efforts, some changes to the detailed timeline and costs of the projects are possible during the pandemic, the related containment measures, or due to tight global logistics and supply chains.

UPM rescheduled the maintenance shutdown at the UPM Kymi pulp mill from Q2 2021 to Q4 2021 due to the pandemic.

Timing of significant maintenance shutdowns in 2022



UPM’s financial position is strong. UPM's net debt was EUR 837 million at the end of Q1 2022. Cash funds and unused committed credit facilities totalled EUR 2.9 billion at the end of Q1 2022. This includes the sustainability-linked EUR 750 million committed syndicated revolving credit facility maturing in 2027, sustainability-linked EUR 500 million bilateral revolving credit facilities signed in Q1 2022, of which EUR 300 million matures in 2025 and EUR 200 million in 2027, and a EUR 159 million equivalent rolling overdraft facility. During Q4 2020, UPM successfully issued a EUR 750 million Green Bond under its EMTN (Euro Medium Term Note). A second EUR 500 million Green Bond was issued in Q1 2021. The facilities and UPM's outstanding debt have no financial covenants.

Impact of the Russia's war in Ukraine

In response to the Russia´s attack on Ukraine, the European Union as well as the United States, the United Kingdom, and other countries have imposed extensive sanctions on Russia, the breakaway regions Donetsk and Luhansk, and Belarus. Since 21 February 2022, these measures include for example asset freezes and travel restrictions on individuals and entities, economic sanctions targeting sectors of the Russian and Belarusian economies, and diplomatic restrictions.

Global economy

While the sanctions primarily target Russia’s ability to finance its military operations in Ukraine and cause economic and political costs on people responsible for them, economic uncertainty and cost inflation may accelerate especially in countries that have significant trade with Russia. Import bans concerning various goods categories will restrict the availability of raw materials and drive cost increases in many supply chains that have been under increasing pressure during the COVID-19 pandemic. Export bans will impact industries dependent on Russian market and shift delivery volumes and services to other markets. Fuel prices are exposed to geopolitical uncertainties and because of Russia’s attack on Ukraine and the current sanctions imposed on Russian fuels, the volatility on energy costs can increase, especially if the scope of the sanctions increases further to Russian gas and oil.

Impact on UPM businesses

The EU has imposed bans on wood product exports and imports, prohibitions of Russian transportation operators entering EU as well as sanctioned several Russian banks. Disruptions in international sales, purchases and payment flows involving Russian counterparties are inevitable. Major forest certification organisations (i.e. FSCTM and PEFC) have also excluded Russian and Belarusian wood from their certification systems. For the time being, UPM businesses have suspended deliveries to Russia as well as wood sourcing in and from Russia. UPM also decided to suspend the UPM Chudovo plywood mill operations following carefully the legislation in Russia and with due consideration of local employees, customers, and stakeholders. Due to the significant uncertainties related to operations in Russia and Ukraine, UPM has recognised a write off of all assets and receivables locating or relating operations in these countries in Q1 2022. Impairment of fixed assets, inventories and other receivables amounting to EUR 95 million was reported as items affecting comparability. In addition, the group increased the general provision for expected credit losses on trade receivables by EUR 17 million that is impacting comparable EBIT. UPM’s sales to Russia and Ukraine combined was approximately 2% of UPM’s total sales in 2021. Assets in Russia are less than 1% of the group total. In 2021, less than 10% of UPM’s wood sourcing to Finland originated from Russia.

Adjusting to different scenarios

The full impact of the current and possible new sanctions and counter-sanctions will be known only as the situation evolves. UPM has implemented mitigation plans to contain and reduce negative consequences to its employees, customers, vendors, and other stakeholders as well as operations affected by the sanctions. The potential further impacts to UPM are likely to differ by business and by the pace, scope and duration of sanctions, market price reactions, development of supply chains’ footprint, and the length of the war in Ukraine. UPM monitors the situation closely and prepares plans to adjust its operations in different scenarios accordingly.


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

Page modified 26.04.2022