|
|||
2009-08-04 08:30:00 CEST 2009-08-04 08:30:05 CEST REGULATED INFORMATION UPM-Kymmene - Interim report (Q1 and Q3)UPM Interim Report 1 January-30 June 2009UPM-Kymmene Corporation Interim Report 4 August 2009 at 09:30 UPM Interim Report 1 January-30 June 2009 Earnings per share for the second quarter were EUR -0.02 (0.18), and excluding special items EUR 0.03 (0.17). Operating profit excluding special items was EUR 31 million (155 million) and reported operating profit was EUR 8 million (157 million). Good operating cash flow ensured liquidity and thus the net interest-bearing liabilities at the end of June came to EUR 4,036 million (4,479 million). Cost saving measures and temporary layoffs resulted in a fixed cost reduction of EUR 100 million in the second quarter in comparison with the same period last year. Key figures Q2/ Q2/ Q1-Q2/ Q1-Q2/ Q1-Q4/ 2009 2008 2009 2008 2008 Sales, EUR million 1,841 2,378 3,698 4,788 9,461 EBITDA, EUR million 1) 238 313 366 650 1,206 % of sales 12.9 13.2 9.9 13.6 12.7 Operating profit (loss), EUR 8 157 -87 350 24 million excluding special items, EUR 31 155 -47 343 513 million % of sales 1.7 6.5 -1.3 7.2 5.4 Profit (loss) before tax, EUR -26 115 -188 249 -201 million excluding special items, EUR -3 113 -148 242 282 million Net profit (loss) for the -8 90 -166 193 -180 period, EUR million Earnings per share, EUR -0.02 0.18 -0.32 0.38 -0.35 excluding special items, EUR 0.03 0.17 -0.24 0.36 0.42 Diluted earnings per share, -0.02 0.18 -0.32 0.38 -0.35 EUR Return on equity, % neg. 5.5 neg. 5.8 neg. excluding special items, % 0.8 5.4 neg. 5.6 3.4 Return on capital employed, % 0.4 5.8 neg. 6.2 0.2 excluding special items, % 1.3 5.7 neg. 6.0 4.6 Operating cash flow per 0.59 0.09 1.12 0.19 1.21 share, EUR Shareholders' equity per 11.08 12.64 11.08 12.64 11.74 share at end of period, EUR Gearing ratio at end of 70 68 70 68 71 period, % Net interest-bearing 4,036 4,479 4,036 4,479 4,321 liabilities at end of period, EUR million Capital employed at end of 10,294 11,260 10,294 11,260 11,193 period, EUR million Capital expenditure, EUR 66 137 133 274 551 million Personnel at end of period 23,792 27,059 23,792 27,059 24,983 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. Results Q2 of 2009 compared with Q2 of 2008 Sales for the second quarter of 2009 were EUR 1,841 million, 23% lower than the EUR 2,378 million in the second quarter of 2008. Sales decreased due to lower deliveries across all of UPM's business areas. Operating profit was EUR 8 million, 0.4% of sales (157 million, 6.6% of sales). The operating profit excluding special items was EUR 31 million, 1.7% of sales (155 million, 6.5% of sales). Operating profit includes net restructuring charges of EUR 23 million as special items. Operating profit declined clearly from the same period last year. The main reason for weaker profitability was significantly lower deliveries in all of UPM's business areas due to lower economic activity. UPM continued its flexible operating mode in all of its business areas, adjusting production to the low demand. Due to cost saving measures and temporary layoffs, the company's fixed costs decreased by EUR 100 million in comparison to the same period last year. Wood costs decreased slightly from the comparison period. Energy costs increased. The average paper price in euro increased by approximately 1% from the same period last year. The average price for label materials was clearly higher. However, timber and plywood prices fell substantially. Overall, the net effect of sales prices in euro terms across UPM's businesses had a minor negative impact on profitability. The increase in the fair value of biological assets net of wood harvested was EUR 10 million compared to EUR 20 million a year before. The share of results of associated companies and joint ventures was EUR 22 million negative (21 million positive). The loss before tax was EUR 26 million (profit of EUR 115 million) and excluding special items the loss was EUR 3 million (profit of EUR 113 million). Interest and other finance costs, net, were EUR 37 million (43 million). Exchange rate and fair value gains and losses resulted in a gain of EUR 3 million (loss of EUR 1 million). Income taxes were EUR 18 million positive (25 million negative). The impact on taxes from special items was EUR 3 million positive (1 million negative). The loss for the second quarter was EUR 8 million (profit of EUR 90 million) and earnings per share were EUR -0.02 (0.18). Earnings per share excluding special items were EUR 0.03 (0.17). January-June of 2009 compared with January-June of 2008 Sales for January-June were EUR 3,698 million, 23% lower than the EUR 4,788 million in the same period in 2008. Sales decreased due to lower deliveries across all of UPM's business areas. Operating loss was EUR 87 million, -2.4% of sales (profit of EUR 350 million, 7.3% of sales). The operating loss excluding special items was EUR 47 million, -1.3% of sales (profit of EUR 343 million, 7.2% of sales). Operating loss includes charges net of EUR 40 million as special items. UPM sold assets related to the former Miramichi paper mill in Canada and recorded an income of EUR 21 million. Restructuring measures resulted into net special charges of EUR 32 million. The share of the results of associated companies includes special charges of EUR 29 million. Operating profit declined clearly from the same period last year. The main reason for weaker profitability was significantly lower deliveries in all of UPM's business areas. UPM responded to lower demand with a flexible way of operating in all of its business areas, using temporary capacity shutdowns to adjust production to the low demand. Due to cost saving measures and temporary layoffs, the company's fixed costs decreased by EUR 170 million in comparison to the same period last year. This could not, however, compensate for the impact of lower deliveries. Energy costs increased EUR 60 million from the comparison period. Wood costs started to decrease during the period. The positive impact on operating profit was still relatively minor as UPM consumed wood inventories built up in 2008 at high wood prices. The average paper price in euro increased by approximately 2% from the same period last year. The average price for label materials was clearly higher. However, timber and plywood prices fell substantially. Overall, the net effect of sales prices in euro terms across UPM's businesses had a minor positive impact on profitability. The increase in the fair value of biological assets net of wood harvested was EUR 21 million compared to EUR 48 million a year before. The share of results of associated companies and joint ventures was EUR 75 million negative (43 million positive). The result includes special charges of EUR 29 million from Metsä-Botnia's Kaskinen pulp mill closure. The loss before tax was EUR 188 million (profit of EUR 249 million) and excluding special items the loss was EUR 148 million (profit of EUR 242 million). Interest and other finance costs, net, were EUR 95 million (92 million). Exchange rate and fair value gains and losses resulted in a loss of EUR 6 million (11 million). Income taxes were EUR 22 million positive (56 million negative). The impact on taxes from special items was EUR 0 million (1 million negative). The loss for the period was EUR 166 million (profit of EUR 193 million) and earnings per share were EUR -0.32 (0.38). Earnings per share excluding special items were EUR -0.24 (0.36). Operating cash flow per share was EUR 1.12 (0.19). Financing In January-June cash flow from operating activities, before capital expenditure and financing, was EUR 580 million (96 million). Net working capital decreased by EUR 355 million during the period (increased by EUR 245 million). The gearing ratio as of 30 June 2009 was 70% (68% on 30 June 2008). Net interest-bearing liabilities at the end of the period came to EUR 4,036 million (4,479 million). In March 2009, UPM replaced the EUR 1.5 billion credit facility that was to mature in 2010 with a new EUR 825 million credit facility, maturing in 2012. On 30 June 2009, UPM's cash funds and unused committed credit facilities totalled EUR 1.7 billion. Personnel In January-June, UPM had an average of 24,043 employees (26,274). At the beginning of the year, the number of employees was 24,983 and at the end of June it was 23,792. The reduction of 1,191 employees is mostly attributable to ongoing restructuring. Capital expenditure During January-June, capital expenditure was EUR 133 million, 3.6% of sales (EUR 274 million, 5.7% of sales). The new renewable energy power plant at the Caledonian mill in Irvine, Scotland was started in June. The total investment cost was GBP 68 million. UPM continued its tight investment discipline during the first six months of 2009. Few new investment decisions were made. The largest ongoing project is now the rebuild of the debarking plant at the Pietarsaari mill in Finland. The total investment cost is estimated to be EUR 30 million. Restructuring In September 2008, UPM announced the plan to close the Kajaani paper mill and Tervasaari pulp mill, as well as new measures to improve efficiency in all of the company's business areas and functions. In November 2008, UPM's Label business area announced restructuring of its European operations. Mill closures were completed at the end of 2008 and the Label business area completed most of the planned closures of production lines during the first half of the year. In Plywood business restructuring continued as processing operations of Lahti mill were transferred to other plywood mills. In Forest and timber a plan for closing of Boulogne operations was published. Restructuring has been a continuous process to improve profitability. Together with earlier measures the reduction in the number of employees from the same period last year, excluding seasonal employees, is about 2,160 of which 600 due to closures of production. The annualised employee related cost savings are about EUR 110 million. Shares UPM shares worth EUR 3,086 million (5,326 million) in total were traded on the NASDAQ OMX Helsinki stock exchange during January-June of 2009. The highest quotation was EUR 9.78 in January and the lowest EUR 4.33 in April. The company's ADSs are traded on the US over-the-counter (OTC) market under a Level 1 sponsored American Depositary Receipt programme. The Annual General Meeting held on 25 March 2009 approved a proposal by the Board of Directors to authorise the Board of Directors to decide on the buy-back of not more than 51,000,000 own shares. The authorisation is valid for 18 months from the date of the decision. The Annual General Meeting of 27 March 2007 decided to authorise the Board to decide on a free issue of shares to the company itself so that the total number of shares to be issued to the company combined with the number of own shares bought back under the buy-back authorisation may not exceed 1/10 of the total number of shares of the company. In addition, the Board has the authority to decide to issue shares and special rights entitling the holder to shares of the company. The number of new shares to be issued, including shares to be obtained under special rights, shall be no more than 250,000,000. Of that, the maximum number that can be issued to the company's shareholders based on their pre-emptive rights is 250,000,000 shares and the maximum amount that can be issued deviating from the shareholders' pre-emptive rights in a directed share issue is 100,000,000 shares. The maximum number of new shares to be issued as part of the company's incentive programmes is 5,000,000. Furthermore, the Board is authorised to decide on the disposal of own shares. To date, this authorisation has not been used. These authorisations of the Annual General Meeting 2007 will remain valid for no more than three years from the date of the decision. The AGM of 27 March 2007 also decided on granting share options in connection with the company's share-based incentive plans. In option programmes 2007A, 2007B and 2007C, the total number of share options is no more than 15,000,000 and they will entitle the holders to subscribe for a total of no more than 15,000,000 new shares of the company. Apart from the above, the Board of Directors has no current authorisation to issue shares, convertible bonds or share options. The number of shares entered in the Trade Register on 30 June 2009 was 519,970,088. Through the issuance authorisation and share options, the number of shares may increase to a maximum of 790,970,088. At the end of the period, the company held 15,944 of its own shares, or 0.003% of the total number of shares, which have been granted under the Group's share reward scheme. These shares have been returned to the company in connection with the termination of employment contracts. Litigation and other legal actions Certain competition authorities are continuing investigations into alleged antitrust activities with respect to various UPM products. The authorities have granted UPM conditional full immunity with respect to certain conduct disclosed to them. UPM has settled or agreed to settle the class-action lawsuits in the US except for those filed by indirect purchasers of labelstock. The remaining litigation matters may last several years. No provisions have been made in relation to these investigations. In Finland, UPM is participating in the country's fifth nuclear power plant unit, Olkiluoto 3, through its associated company Pohjolan Voima Oy. Pohjolan Voima Oy is with 58.12% a majority shareholder of Teollisuuden Voima Oy (“TVO”). In January 2009, the constructor TVO disclosed information, confirmed by the plant supplier, consortium AREVA-Siemens, that the construction of the unit is delayed and the unit is estimated to start up in summer 2012. In June 2009, TVO informed that the arbitration filed in December by AREVA-Siemens, concerning Olkiluoto 3 delay and related costs amounted to EUR 1.0 billion. In response, TVO has filed in April 2009 a counter-claim for costs and losses that TVO is incurring due to the delay and other defaults on the part of the supplier. The value of TVO's counterclaim is currently approximately EUR 1.4 billion. Events after the balance sheet date On 15 July 2009, UPM and Metsäliitto Cooperative signed a letter of intent to restructure the ownership of the assets of the pulp company Oy Metsä-Botnia Ab (Botnia). The transaction is subject to a definitive agreement, due diligence, finalising negotiations with Botnia's lenders and required regulatory approvals. In the proposed transaction, UPM would receive Metsäliitto's and Botnia's share of the Fray Bentos pulp mill and the eucalyptus plantation forestry company Forestal Oriental in Uruguay, and dispose part of its current 47% ownership in Botnia. After the transaction, Botnia would consist of its current operations in Finland and be owned by Metsäliitto 53%, M-real 30% and UPM 17%. UPM's share of the pulp capacity of Botnia's Finnish mills would decrease from 1.1 million tonnes to 400,000 tonnes. At the same time, UPM would become 91% owner of the Fray Bentos pulp mill and UPM's share of eucalyptus pulp would increase by approx. 500,000 tonnes. In addition, UPM would acquire 1.2% of the energy company Pohjolan Voima Oy from Botnia. The proposed transactions are expected to be concluded during the last quarter of 2009. Outlook for the second half of 2009 Contraction of economic activity in UPM's main markets has slowed down and economic indicators show improving consumer confidence. However, recession continues to have an impact on consumer demand, construction activity, and advertising in print media and thus on demand for all of UPM's products. UPM will continue to curtail production in most of its businesses to respond to the market demand. UPM's paper deliveries for the second half of 2009 are forecast to be somewhat higher than during the first half of the year as order intake has improved from the end of the year 2008. The average price for paper deliveries in euro is expected to be lower than during the first half of the year. Demand for self-adhesive labelstock in the main markets is estimated to remain at current levels and pressure on product prices to continue. Demand for birch and spruce plywood is forecast to continue at the current low level for the rest of the year and average price to be somewhat lower than during the first half of the year. Compared to the first half of the year, wood and other raw material costs for the Group are expected to be lower. Business area reviews Energy Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 Sales, EUR million 100 136 141 129 103 105 236 EBITDA, EUR million 1) 41 57 76 58 34 39 98 % of sales 41.0 41.9 53.9 45.0 33.0 37.1 41.5 Share of results of -4 -4 -11 -8 -2 -5 -8 associated companies and joint ventures, EUR million Depreciation, amortisation -1 -2 -3 -1 -1 -1 -3 and impairment charges, EUR million Operating profit, EUR million 36 51 62 49 31 33 87 % of sales 36.0 37.5 44.0 38.0 30.1 31.4 36.9 Special items, EUR million - - - - - - - Operating profit excl. 36 51 62 49 31 33 87 special items, EUR million % of sales 36.0 37.5 44.0 38.0 30.1 31.4 36.9 Electricity deliveries, 1,999 2,486 2,731 2,653 2,344 2,439 4,485 1,000 MWh Q1-Q2/ Q1-Q4/ 2008 2008 Sales, EUR million 208 478 EBITDA, EUR million 1) 73 207 % of sales 35.1 43.3 Share of results of -7 -26 associated companies and joint ventures, EUR million Depreciation, amortisation -2 -6 and impairment charges, EUR million Operating profit, EUR million 64 175 % of sales 30.8 36.6 Special items, EUR million - - Operating profit excl. 64 175 special items, EUR million % of sales 30.8 36.6 Electricity deliveries, 4,783 10,167 1,000 MWh 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. Q2 of 2009 compared with Q2 of 2008 Operating profit excluding special items was EUR 36 million, EUR 5 million higher than last year (31 million). Sales decreased by 3% to EUR 100 million (103 million), of which EUR 24 million was external sales (20 million). The electricity sales volume was 2.0 TWh in the quarter (2.3 TWh). January-June 2009 compared with January-June 2008 Operating profit excluding special items was EUR 87 million, EUR 23 million higher than last year (64 million). Sales increased by 13% to EUR 236 million (208 million), of which EUR 73 million was external sales (35 million). Internal sales decreased by 6% due to lower energy consumption in the company's own mills. The electricity sales volume was 4.5 TWh (4.8 TWh). Profitability improved compared with the same period last year, due to the higher average electricity sales price. The average electricity sales price increased by 31% to EUR 43.6/MWh (33.3/MWh). The average cost of procured electricity increased as the hydropower volume was 17% lower than last year. Market review The average electricity price in the Nordic electricity exchange in the first half of the year was unchanged at EUR 36.1/MWh (36.3/MWh). The consumption of electricity in the Nordic area decreased due to low industrial activity. Oil and coal market prices were lower compared to the same period last year. CO2 emission allowance prices decreased. The one year forward electricity price in the Nordic electricity exchange averaged EUR 36.0/MWh in the first half of the year, 34% lower than in the same period last year (54.4/MWh). In the first half of the year the Nordic water reservoirs were below the long-term average. Pulp Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q2/Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 2008 Sales, EUR million 132 139 200 228 247 269 271 516 EBITDA, EUR million 1) -24 -55 9 38 35 57 -79 92 % of sales -18.2 -39.6 4.5 16.7 14.2 21.2 -29.2 17.8 Share of results of -16 -47 -4 44 20 26 -63 46 associated companies and joint ventures, EUR million Depreciation, amortisation -20 -20 -73 -22 -17 -16 -40 -33 and impairment charges, EUR million Operating profit, EUR´million -60 -122 -76 60 38 67 -182 105 % of sales -45.5 -87.8 -38.0 26.3 15.4 24.9 -67.2 20.3 Special items, EUR million 2) - -29 -59 - - - -29 - Operating profit excl. -60 -93 -17 60 38 67 -153 105 special items, EUR million % of sales -45.5 -66.9 -8.5 26.3 15.4 24.9 -56.5 20.3 Pulp deliveries, 1,000 t 391 372 421 480 527 554 763 1,081 Q1-Q4/ 2008 Sales, EUR million 944 EBITDA, EUR million 1) 139 % of sales 14.7 Share of results of 86 associated companies and joint ventures, EUR million Depreciation, amortisation -128 and impairment charges, EUR million Operating profit, EUR million 89 % of sales 9.4 Special items, EUR million 2) -59 Operating profit excl. 148 special items, EUR million % of sales 15.7 Pulp deliveries, 1,000 t 1,982 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In 2009, special items of EUR 29 million relate to the associated company Metsä-Botnia's Kaskinen pulp mill closure. In 2008, special items of EUR 59 million relate to the closure of the Tervasaari pulp mill. Q2 of 2009 compared with Q2 of 2008 Operating loss excluding special items was EUR 60 million (profit of EUR 38 million). The sales of UPM's own pulp mills decreased by 47% to EUR 132 million (247 million) and deliveries by 26% to 391,000 tonnes (527,000). The share of results of the associated company Metsä-Botnia was loss of EUR 16 million (profit of EUR 20 million). January-June 2009 compared with January-June 2008 Operating loss excluding special items was EUR 153 million (profit of EUR 105 million). The sales of UPM's own pulp mills decreased by 47% to EUR 271 million (516 million) and deliveries by 29% to 763,000 tonnes (1,081,000). Due to reduced internal consumption the Tervasaari pulp mill closure at the end of 2008 did not have notable impact on deliveries. Profitability weakened substantially in comparison with the previous year, mainly due to the approximately 26% lower average pulp price and lower deliveries. Wood costs remained at a high level. Chemical pulp inventories increased slightly from the beginning of the year. The share of results of the associated company Metsä-Botnia was loss of EUR 63 million (profit of EUR 46 million). The result includes special charges of EUR 29 million from Metsä-Botnia's Kaskinen mill closure. However, the utilisation rate of the Uruguay mill has remained high and the result of the mill slightly positive. Market review In the first half of 2009, global chemical market pulp shipments declined from the comparison period by almost 7%. Chemical pulp producer inventories declined from the high level of the beginning of the year to a normal level at the end of the period due to extensive production curtailments and strong demand in China. Chemical pulp market prices declined. The average softwood pulp (NBSK) market price in euro terms, at EUR 445/tonne, was 24% lower than in the same period last year (EUR 582/tonne). The bottom market price during the period was EUR 421/tonne. In the end of the period the NBSK market price was EUR 441/ tonne. The average hardwood pulp (BHKP) market price in euro terms also decreased by 28% from last year to EUR 385/tonne (EUR 531/tonne). The bottom market price during the period was EUR 352/tonne. In the end of the period the BHKP market price was EUR 359/ tonne. Forest and timber Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q2/Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 2008 Sales, EUR million 309 385 419 475 518 508 694 1,026 EBITDA, EUR million 1) -15 -15 -52 -4 4 4 -30 8 % of sales -4.9 -3.9 -12.4 -0.8 0.8 0.8 -4.3 0.8 Change in fair value of 10 11 -2 4 20 28 21 48 biological assets and wood harvested, EUR million Share of results of 1 1 -1 - - 1 2 1 associated companies and joint ventures, EUR million Depreciation, amortisation -14 -5 -6 -36 -7 -7 -19 -14 and impairment charges, EUR million Operating profit, EUR million -18 -18 -63 -38 17 25 -36 42 % of sales -5.8 -4.7 -15.0 -8.0 3.3 4.9 -5.2 4.1 Special items, EUR million 2) -8 -10 -2 -33 - -1 -18 -1 Operating profit excl. -10 -8 -61 -5 17 26 -18 43 special items, EUR million % of sales -3.2 -2.1 -14.6 -1.1 3.3 5.1 -2.6 4.2 Sawn timber deliveries, 1,000 M3 366 363 421 510 628 573 729 1,201 Q1-Q4/ 2008 Sales, EUR million 1,920 EBITDA, EUR million 1) -48 % of sales -2.5 Change in fair value of 50 biological assets and wood harvested, EUR million Share of results of - associated companies and joint ventures, EUR million Depreciation, amortisation -56 and impairment charges, EUR million Operating profit, EUR million -59 % of sales -3.1 Special items, EUR million 2) -36 Operating profit excl. -23 special items, EUR million % of sales -1.2 Sawn timber deliveries, 2,132 1,000 m3 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) Special items for the second quarter of 2009 include impairment charges of EUR 8 million related to wood procurement operations. In the first quarter of 2009, special items of EUR 10 million relate to the sales loss of Miramichi's forestry and sawmilling operations' assets. Special items in 2008 include an impairment charge of EUR 31 million related to fixed assets of the Finnish sawmills. Q2 of 2009 compared with Q2 of 2008 Operating loss excluding special items was EUR 10 million (profit of EUR 17 million). Sales declined by 40% to EUR 309 million (518 million). Sawn timber deliveries decreased by 42% to 366,000 cubic metres (628,000). The increase in the fair value of biological assets (growing trees) was EUR 14 million (51 million). The cost of wood raw material harvested from the Group's own forests was EUR 4 million (31 million). The net effect was EUR 10 million positive (20 million positive). January-June 2009 compared with January-June 2008 Operating loss excluding special items was EUR 18 million (profit of EUR 43 million). Sales declined by 32% to EUR 694 million (1,026 million). Sawn timber deliveries decreased by 39% to 729,000 cubic metres (1,201,000). Profitability weakened from the same period last year, mainly due to the approximately 16% lower average price of delivered timber goods as well as lower deliveries. Wood deliveries to the company's own mills were considerably lower than a year ago. Despite lower than planned consumption the wood inventories decreased, however, due to both reduced purchases of wood and loggings from the company's own forests. At the end of the period company's wood inventory level was closer to current consumption requirements. Wood costs remained at a high level, due to consumption of inventories retained in 2008. The increase in the fair value of biological assets (growing trees) was EUR 35 million (92 million). The cost of wood raw material harvested from the Group's own forests was EUR 14 million (44 million). The net effect was EUR 21 million positive (48 million positive). Market review During the first half of the year, demand for both redwood and whitewood sawn timber in Europe declined substantially in comparison with the last year due to low construction activity. The weak market balance resulted in significantly lower prices. Wood purchases in the Finnish wood market were significantly lower compared to the same period last year. The main reasons for this were the industry's lower production and high wood inventories. However, the non-integrated saw mills suffered from log shortages in the second quarter due to low market supply. Wood prices declined by on average of about 16% compared to the same period in the previous year. Paper Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 Sales, EUR million 1,388 1,367 1,750 1,761 1,727 1,773 2,755 EBITDA, EUR million 1) 247 187 189 271 216 209 434 % of sales 17.8 13.7 10.8 15.4 12.5 11.8 15.8 Share of results of -1 -1 1 - - - -2 associated companies and joint ventures, EUR million Depreciation, amortisation -147 -149 -264 -388 -156 -159 -296 and impairment charges, EUR million Operating profit, EUR million 85 60 -126 -114 60 51 145 % of sales 6.1 4.4 -7.2 -6.5 3.5 2.9 5.3 Special items, EUR million 2) -10 23 -153 -227 - 1 13 Operating profit excl. 95 37 27 113 60 50 132 special items, EUR million % of sales 6.8 2.7 1.5 6.4 3.5 2.8 4.8 Deliveries, publication 1,323 1,304 1,809 1,760 1,749 1,772 2,627 papers, 1,000 t Deliveries, fine and 813 724 784 863 923 981 1,537 speciality papers, 1,000 t Paper deliveries total, 2,136 2,028 2,593 2,623 2,672 2,753 4,164 1,000 t Q1-Q2/ Q1-Q4/ 2008 2008 Sales, EUR million 3,500 7,011 EBITDA, EUR million 1) 425 885 % of sales 12.1 12.6 Share of results of - 1 associated companies and joint ventures, EUR million Depreciation, amortisation -315 -967 and impairment charges, EUR million Operating profit, EUR million 111 -129 % of sales 3.2 -1.8 Special items, EUR million 2) 1 -379 Operating profit excl. 110 250 special items, EUR million % of sales 3.1 3.6 Deliveries, publication 3,521 7,090 papers, 1,000 t Deliveries, fine and 1,904 3,551 speciality papers, 1,000 t Paper deliveries total, 1,000 t 5,425 10,641 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) Special items for the second quarter of 2009 include charges of EUR 9 million related to personnel reduction in Nordland mill, impairment reversals of EUR 4 million and other restructuring charges of EUR 5 million. In the first quarter of 2009, special items include an income of EUR 31 million related to the sale of the assets of the former Miramichi paper mill and charges of EUR 8 million related to restructuring measures. In 2008, special items include the goodwill impairment charge of EUR 230 million, impairment charges of EUR 101 million and other restructuring costs of EUR 42 million related to the closure of the Kajaani paper mill, and other restructuring costs, net of EUR 6 million. Q2 of 2009 compared with Q2 of 2008 Operating profit excluding special items was EUR 95 million, EUR 35 million higher than a year ago (60 million). Sales were EUR 1,388 million (1,727 million). Paper deliveries decreased by 20% to 2,136,000 tonnes (2,672,000). Paper deliveries for publication papers (magazine papers and newsprint) decreased by 24% and for fine and speciality papers by 12% from the previous year. Profitability improved from the comparison period. Lower deliveries had a significant negative impact on profitability, but this was offset by lower fibre costs, mainly for chemical pulp. Fixed costs decreased significantly. The average price for all paper deliveries when translated into euros was 1% higher than in the second quarter of 2008. January-June 2009 compared with January-June 2008 Operating profit excluding special items was EUR 132 million, EUR 22 million higher than a year ago (110 million). Sales were EUR 2,755 million (3,500 million). Paper deliveries decreased by 23% to 4,164,000 tonnes (5,424,000). Paper deliveries for publication papers (magazine papers and newsprint) decreased by 25% and for fine and speciality papers by 19% from the previous year. The Kajaani paper mill was closed at the end of 2008. Due to the reduced demand, the closure had only minor impact on UPM's paper deliveries. Profitability improved from the corresponding period last year. Lower deliveries had a significant negative impact on profitability, but this was offset by lower costs for fibre, mainly for chemical pulp, and reduction in fixed costs. The average price for all paper deliveries when translated into euros was 2% higher than last year. Market review In Europe, during the first half of the year, demand for publication papers was 19% lower and for fine papers 19% lower than a year ago. In North America, demand for publication papers continued to decline and was 28% down from last year. Demand for fine papers also decreased in Asia, even though it started to recover during the period under review. The average market prices in euro area increased, but decreased in the GBP area when translated into euros due to 15% devaluation of the pound. In Europe, the average market prices in euros increased by about 3% for magazine papers and by about 1% for standard newsprint when compared with the first half of 2008. The average market price increased by 4% for coated fine papers and declined by 7% for uncoated fine papers in comparison to the previous year. In North America, the average US dollar prices for magazine papers were 6% lower compared to the corresponding period a year ago. In Asia, market prices for fine papers decreased. Label Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q2/Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 2008 Sales, EUR million 226 223 233 239 245 242 449 487 EBITDA, EUR million 1) 18 6 -1 9 15 11 24 26 % of sales 8.0 2.7 -0.4 3.8 6.1 4.5 5.3 5.3 Depreciation, amortisation -11 -9 -16 -8 -7 -8 -20 -15 and impairment charges, EUR million Operating profit, EUR million 4 -3 -38 1 8 3 1 11 % of sales 1.8 -1.3 -16.3 0.4 3.3 1.2 0.2 2.3 Special items, EUR million 2) -5 - -28 - - - -5 - Operating profit excl. 9 -3 -10 1 8 3 6 11 special items, EUR million % of sales 4.0 -1.3 -4.3 0.4 3.3 1.2 1.3 2.3 Q1-Q4/ 2008 Sales, EUR million 959 EBITDA, EUR million 1) 34 % of sales 3.5 Depreciation, amortisation -39 and impairment charges, EUR million Operating profit, EUR million -26 % of sales -2.7 Special items, EUR million 2) -28 Operating profit excl. 2 special items, EUR million % of sales 0.2 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In the second quarter of 2009, special items include impairment charges of EUR 2 million and other restructuring charges of EUR 3 million. In 2008, special items of EUR 28 million relate to measures to reduce coating capacity and close two slitting terminals in Europe. Q2 of 2009 compared with Q2 of 2008 Operating profit excluding special items was EUR 9 million (8 million). Sales were EUR 226 million (245 million). Profitability improved slightly despite lower deliveries, mainly due to fixed cost reductions and higher sales prices. The delivery volumes of self-adhesive label materials declined by close to 15%, remaining roughly at the level of the first quarter. Average prices converted to euros increased by about 7%. January-June 2009 compared with January-June 2008 Operating profit excluding special items was EUR 6 million (11 million). Sales were EUR 449 million (487 million). Profitability weakened mainly due to lower sales volumes. The delivery volumes of self-adhesive label materials declined by some 15%, driven by lower economic activity. Average prices converted to euros increased by about 8%, more than compensating for higher raw material costs. Fixed costs decreased. In 2008, UPM Raflatac opened two new labelstock factories; one in Dixon, USA, in January and another in Wroclaw, Poland, in November. The start-up of both factories has proceeded according to the plan. The restructuring of European operations, which was announced in the fourth quarter of 2008, has proceeded as planned. Most of the capacity closures were implemented by the end of the second quarter and the programme will be completed by the end of the year 2009. Market review During the first half of the year, demand for self-adhesive label materials declined in all markets as demand for consumer products and shipments of goods slowed down. In all markets, demand has now stabilised at the current low level during the first half of the year. The market prices in euro terms were higher than in the comparison period. In local currencies, depending on the region, prices in the second quarter either increased slightly or were stable compared with the first quarter of 2009. Plywood Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q2/Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 2008 Sales, EUR million 77 75 102 121 150 157 152 307 EBITDA, EUR million 1) -5 -23 -5 3 22 26 -28 48 % of sales -6.5 -30.7 -4.9 2.5 14.7 16.6 -18.4 15.6 Depreciation, amortisation -5 -5 -5 -5 -6 -5 -10 -11 and impairment charges, EUR million Operating profit, EUR million -10 -29 -10 -2 19 21 -39 40 % of sales -13.0 -38.7 -9.8 -1.7 12.7 13.4 -25.7 13.0 Special items, EUR million 2) - -1 - - 3 - -1 3 Operating profit excl. -10 -28 -10 -2 16 21 -38 37 special items, EUR million % of sales -13.0 -37.3 -9.8 -1.7 10.7 13.4 -25.0 12.1 Deliveries, plywood, 1,000 m3 141 133 160 188 227 231 274 458 Q1-Q4/ 2008 Sales, EUR million 530 EBITDA, EUR million 1) 46 % of sales 8.7 Depreciation, amortisation -21 and impairment charges, EUR million Operating profit, EUR million 28 % of sales 5.3 Special items, EUR million 2) 3 Operating profit excl. 25 special items, EUR million % of sales 4.7 Deliveries, plywood, 1,000 m3 806 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) Special items in 2008 include reversals of provisions related to the disposed Kuopio plywood mill. Q2 of 2009 compared with Q2 of 2008 Operating loss excluding special items was EUR 10 million (profit of EUR 16 million). Sales decreased by EUR 73 million to EUR 77 million (150 million), as plywood deliveries declined by 38% to 141,000 cubic metres (227,000). Plywood reported an operating loss due to significantly lower delivery volumes and lower sales prices than in the comparison period. January-June 2009 compared with January-June 2008 Operating loss excluding special items was EUR 38 million (profit of EUR 37 million). Sales halved by EUR 155 million to EUR 152 million (307 million), as plywood deliveries declined by 40% to 274,000 cubic metres (458,000). Plywood reported an operating loss due to significantly lower delivery volumes and lower sales prices than in the comparison period. Significant fixed cost reductions were implemented throughout the organisation, but these could not compensate for the adverse impact of deliveries and prices. Weak market demand led to extensive production downtime at all mills. The Heinola mill was temporarily shut down from January 2009 onwards. The Kaukas mill was temporarily shut down from May onwards. UPM announced in April that operations at the Lahti mill will be moved to other mills by the end of the year. At the Kalso veneer mill, a production automation project was completed in May. As a result, the number of personnel at the mill will be reduced by 53 people. Market review In Europe, plywood demand declined substantially from the first half of 2008 due to record low construction activity and demand for engineered end products in transportation and other industrial end uses. Declining demand in Europe has left much idle capacity. Inventories have been reduced in all parts of the supply chain. The market prices have declined. Other operations Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 Sales, EUR million 21 34 34 52 66 48 55 EBITDA, EUR million 1) -24 -29 -38 3 -13 -9 -53 % of sales -114.3 -85.3 -111.8 5.8 -19.7 -18.8 -96.4 Share of results of -2 -2 -1 -1 3 - -4 associated companies and joint ventures, EUR million Depreciation, amortisation -3 -3 2 -2 -5 -3 -6 and impairment charges, EUR million Operating profit, EUR million -29 -34 -35 4 -16 -7 -63 % of sales -138.1 -100.0 -102.9 7.7 -24.2 -14.6 -114.5 Special items, EUR million 2) - - 2 4 -1 5 - Operating profit excl. -29 -34 -37 0 -15 -12 -63 special items, EUR million % of sales -138.1 -100.0 -108.8 0.0 -22.7 -25.0 -114.5 Q1-Q2/Q1-Q4/ 2008 2008 Sales, EUR million 114 200 EBITDA, EUR million 1) -22 -57 % of sales -19.3 -28.5 Share of results of 3 1 associated companies and joint ventures, EUR million Depreciation, amortisation -8 -8 and impairment charges, EUR million Operating profit, EUR million -23 -54 % of sales 20.2 -27.0 Special items, EUR million 2) 4 10 Operating profit excl. -27 -64 special items, EUR million % of sales -23.7 -32.0 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In 2008, special items include an adjustment of EUR 5 million to sales of disposals of 2007 and other restructuring income net of EUR 5 million. Other operations include development units (the wood plastic composite unit UPM ProFi, RFID tags and biofuels), logistic services and corporate administration. Q2 of 2009 compared with Q2 of 2008 Excluding special items, operating loss was EUR 29 million (loss of EUR 15 million). Sales amounted to EUR 21 million (66 million). The operating loss was greater than in the comparison period, mainly due to negative hedging results. The development units continued to incur an operating loss. January-June 2009 compared with January-June 2008 Excluding special items, operating loss was EUR 63 million (loss of EUR 27 million). Sales amounted to EUR 55 million (114 million). The operating loss was greater than in the comparison period, mainly due to negative hedging results. In addition, the development units incurred somewhat higher losses and costs than last year. Helsinki, 4 August 2009 UPM-Kymmene Corporation Board of Directors Financial information This Interim Report is unaudited Consolidated income statement EUR million Q2/ Q2/ Q1-Q2/ Q1-Q2/ Q1-Q4/ 2009 2008 2009 2008 2008 Sales 1,841 2,378 3,698 4,788 9,461 Other operating income 7 11 24 51 83 Costs and expenses -1,627 -2,074 -3,361 -4,182 -8,407 Change in fair value of 10 20 21 48 50 biological assets and wood harvested Share of results of -22 21 -75 43 62 associated companies and joint ventures Depreciation, amortisation -201 -199 -394 -398 -1,225 and impairment charges Operating profit (loss) 8 157 -87 350 24 Gains on available-for-sale - 2 - 2 2 investments, net Exchange rate and fair value 3 -1 -6 -11 -25 gains and losses Interest and other finance -37 -43 -95 -92 -202 costs, net Profit (loss) before tax -26 115 -188 249 -201 Income taxes 18 -25 22 -56 21 Profit (loss) for the period -8 90 -166 193 -180 Attributable to: Equity holders of the parent -8 92 -166 194 -179 company Minority interest - -2 - -1 -1 -8 90 -166 193 -180 Earnings per share for profit (loss) attributable to the equity holders of the parent company Basic earnings per share, EUR -0.02 0.18 -0.32 0.38 -0.35 Diluted earnings per share, EUR -0.02 0.18 -0.32 0.38 -0.35 Statement of comprehensive income EUR million Q2/ Q2/Q1-Q2/Q1-Q2/Q1-Q4/ 2009 2008 2009 2008 2008 Profit (loss) for the period -8 90 -166 193 -180 Other comprehensive income for the period, after tax: Translation differences 37 26 66 -104 -206 Net investment hedge -12 -9 -20 26 56 Cash flow hedges 9 -20 -9 - -33 Share of other comprehensive -12 10 -8 -8 1 income of associated companies Other comprehensive income 22 7 29 -86 -182 for the period, net of tax Total comprehensive income 14 97 -137 107 -362 for the period Total comprehensive income attributable to: Equity holders of the parent 14 99 -137 108 -361 company Minority interest - -2 - -1 -1 14 97 -137 107 -362 Condensed consolidated balance sheet EUR million 30.06.2009 30.06.2008 31.12.2008 ASSETS Non-current assets Goodwill 933 1,163 933 Other intangible assets 394 425 403 Property, plant and equipment 5,439 6,007 5,688 Biological assets 1,152 1,138 1,133 Investments in associated 829 1,210 1,263 companies and joint ventures Deferred tax assets 247 247 258 Other non-current assets 622 398 697 9,616 10,588 10,375 Current assets Inventories 1,062 1,438 1,354 Trade and other receivables 1,422 1,806 1,710 Cash and cash equivalents 192 103 330 2,676 3,347 3,394 Assets classified as held for sale 327 - 12 Total assets 12,619 13,935 13,781 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company Share capital 890 890 890 Fair value and other reserves -132 -76 -165 Reserve for invested 1,145 1,145 1,145 non-restricted equity Retained earnings 3,860 4,615 4,236 5,763 6,574 6,106 Minority interest 14 11 14 Total equity 5,777 6,585 6,120 Non-current liabilities Deferred tax liabilities 592 743 658 Non-current interest-bearing 4,003 3,971 4,534 liabilities Other non-current liabilities 591 584 624 5,186 5,298 5,816 Current liabilities Current interest-bearing liabilities 514 704 537 Trade and other payables 1,142 1,348 1,291 1,656 2,052 1,828 Liabilities related to assets - - 17 classified as held for sale Total liabilities 6,842 7,350 7,661 Total equity and liabilities 12,619 13,935 13,781 Condensed consolidated cash flow statement EUR million Q1-Q2/ Q1-Q2/ Q1-Q4/ 2009 2008 2008 Cash flow from operating activities Profit (loss) for the period -166 193 -180 Adjustments 493 351 1,232 Change in working capital 355 -245 -132 Cash generated from operations 682 299 920 Finance costs, net -85 -118 -216 Income taxes paid -17 -85 -76 Net cash generated from 580 96 628 operating activities Cash flow from investing activities Acquisitions and share purchases - -6 -19 Purchases of intangible and -143 -310 -558 tangible assets Asset sales and other 20 17 45 investing cash flow Net cash used in investing -123 -299 -532 activities Cash flow from financing activities Change in loans and other -387 375 305 financial items Share options exercised - 78 78 Dividends paid -208 -384 -384 Net cash used in financing -595 69 -1 activities Change in cash and cash -138 -134 95 equivalents Cash and cash equivalents at 330 237 237 the beginning of period Foreign exchange effect on cash - - -2 Change in cash and cash -138 -134 95 equivalents Cash and cash equivalents at 192 103 330 end of period Operating cash flow per 1.12 0.19 1.21 share, EUR Consolidated statement of changes in equity Attributable to equity holders of the parent company EUR million Share Translation Fair value capital differences and other reserves Balance at 1 January 2008 890 -158 193 Changes in equity for 2008 Share options exercised - - - Share-based compensation, net of tax - - -19 Dividend paid - - - Business combinations - - - Total comprehensive income for - -91 -1 the period Balance at 30 June 2008 890 -249 173 Balance at 1 January 2009 890 -295 130 Changes in equity for 2009 Share-based compensation, net of tax - - 1 Dividend paid - - - Business combinations - - - Other items - - - Total comprehensive income - 41 -9 for the period Balance at 30 June 2009 890 -254 122 EUR million Reserve for Retained Total invested earnings non-restricted equity Balance at 1 January 2008 1,067 4,778 6,770 Changes in equity for 2008 Share options exercised 78 - 78 Share-based compensation, net of tax - 21 2 Dividend paid - -384 -384 Business combinations - - - Total comprehensive income - 200 108 for the period Balance at 30 June 2008 1,145 4,615 6,574 Balance at 1 January 2009 1,145 4,236 6,106 Changes in equity for 2009 Share-based compensation, net of tax - - 1 Dividend paid - -208 -208 Business combinations - - - Other items - 1 1 Total comprehensive income - -169 -137 for the period Balance at 30 June 2009 1,145 3,860 5,763 EUR million Minority Total interest equity Balance at 1 January 2008 13 6,783 Changes in equity for 2008 Share options exercised - 78 Share-based compensation, net of tax - 2 Dividend paid - -384 Business combinations -1 -1 Total comprehensive income -1 107 for the period Balance at 30 June 2008 11 6,585 Balance at 1 January 2009 14 6,120 Changes in equity for 2009 Share-based compensation, net of tax - 1 Dividend paid - -208 Business combinations - - Other items - 1 Total comprehensive income - -137 for the period Balance at 30 June 2009 14 5,777 Quarterly information EUR million Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2008 2008 2008 2008 Sales 1,841 1,857 2,315 2,358 2,378 2,410 Other operating income 7 17 9 23 11 40 Costs and expenses -1,627 -1,734 -2,227 -1,998 -2,074 -2,108 Change in fair value of 10 11 -2 4 20 28 biological assets and wood harvested Share of results of associated -22 -53 -16 35 21 22 companies and joint ventures Depreciation, amortisation -201 -193 -365 -462 -199 -199 and impairment charges Operating profit (loss) 8 -95 -286 -40 157 193 Gains on available-for-sale - - - - 2 - investments, net Exchange rate and fair value 3 -9 -14 - -1 -10 gains and losses Interest and other finance -37 -58 -60 -50 -43 -49 costs, net Profit (loss) before tax -26 -162 -360 -90 115 134 Income taxes 18 4 74 3 -25 -31 Profit (loss) for the period -8 -158 -286 -87 90 103 Attributable to: Equity holders of the parent -8 -158 -287 -86 92 102 company Minority interest - - 1 -1 -2 1 -8 -158 -286 -87 90 103 Basic earnings per share, EUR -0.02 -0.30 -0.56 -0.17 0.18 0.20 Diluted earnings per share, EUR -0.02 -0.30 -0.56 -0.17 0.18 0.20 Earnings per share, excluding 0.03 -0.27 -0.19 0.25 0.17 0.19 special items, EUR Average number of shares 519,954 519,954 519,979 519,999 517,622 512,581 basic (1,000) Average number of shares 519,954 519,954 519,979 519,999 516,791 513,412 diluted (1,000) Special items in operating -23 -17 -240 -256 2 5 profit (loss) Operating profit (loss), 31 -78 -46 216 155 188 excl. special items % of sales 1.7 -4.2 -2.0 9.2 6.5 7.8 Special items before tax -23 -17 -240 -250 2 5 Profit (loss) before tax, -3 -145 -120 160 113 129 excl. special items % of sales -0.2 -7.8 -5.2 6.8 4.8 5.4 Return on equity, excl. 0.8 neg. neg. 7.8 5.4 5.9 special items, % Return on capital employed, 1.3 neg. neg. 7.7 5.7 6.5 excl. special items, % EBITDA 238 128 178 378 313 337 % of sales 12.9 6.9 7.7 16.0 13.2 14.0 Share of results of associated companies and joint ventures Energy -4 -4 -11 -8 -2 -5 Pulp -16 -47 -4 44 20 26 Forest and timber 1 1 -1 - - 1 Paper -1 -1 1 - - - Other operations -2 -2 -1 -1 3 - Total -22 -53 -16 35 21 22 EUR million Q1-Q2/ Q1-Q2/ Q1-Q4/ 2009 2008 2008 Sales 3,698 4,788 9,461 Other operating income 24 51 83 Costs and expenses -3,361 -4,182 -8,407 Change in fair value of 21 48 50 biological assets and wood harvested Share of results of associated -75 43 62 companies and joint ventures Depreciation, amortisation -394 -398 -1,225 and impairment charges Operating profit (loss) -87 350 24 Gains on available-for-sale - 2 2 investments, net Exchange rate and fair value -6 -11 -25 gains and losses Interest and other finance -95 -92 -202 costs, net Profit (loss) before tax -188 249 -201 Income taxes 22 -56 21 Profit (loss) for the period -166 193 -180 Attributable to: Equity holders of the parent -166 194 -179 company Minority interest - -1 -1 -166 193 -180 Basic earnings per share, EUR -0.32 0.38 -0.35 Diluted earnings per share, EUR -0.32 0.38 -0.35 Earnings per share, excluding -0.24 0.36 0.42 special items, EUR Average number of shares 519,954 515,102 517,545 basic (1,000) Average number of shares 519,954 515,102 517,545 diluted (1,000) Special items in operating -40 7 -489 profit (loss) Operating profit (loss), -47 343 513 excl. special items % of sales -1.3 7.2 5.4 Special items before tax -40 7 -483 Profit (loss) before tax, -148 242 282 excl. special items % of sales -4.0 5.1 3.0 Return on equity, excl. neg. 5.6 3.4 special items, % Return on capital employed, neg. 6.0 4.6 excl. special items, % EBITDA 366 650 1,206 % of sales 9.9 13.6 12.7 Share of results of associated companies and joint ventures Energy -8 -7 -26 Pulp -63 46 86 Forest and timber 2 1 - Paper -2 - 1 Other operations -4 3 1 Total -75 43 62 Deliveries Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q2/ 2009 2009 2008 2008 2008 2008 2009 Electricity, 1,000 MWh 1,999 2,486 2,731 2,653 2,344 2,439 4,485 Pulp, 1,000 t 391 372 421 480 527 554 763 Sawn timber, 1,000 m3 366 363 421 510 628 573 729 Publication papers, 1,000 t 1,323 1,304 1,809 1,760 1,749 1,772 2,627 Fine and speciality papers, 813 724 784 863 923 981 1,537 1,000 t Paper deliveries total, 2,136 2,028 2,593 2,623 2,672 2,753 4,164 1,000 t Plywood, 1,000 m3 141 133 160 188 227 231 274 Q1-Q2/ Q1-Q4/ 2008 2008 Electricity, 1,000 MWh 4,783 10,167 Pulp, 1,000 t 1,081 1,982 Sawn timber, 1,000 m3 1,201 2,132 Publication papers, 1,000 t 3,521 7,090 Fine and speciality papers, 1,904 3,551 1,000 t Paper deliveries total, 1,000 t 5,425 10,641 Plywood, 1,000 m3 458 806 Quarterly segment information EUR million Q2/ Q1/ Q4/ Q3/ 2009 2009 2008 2008 Sales Energy 100 136 141 129 Pulp 132 139 200 228 Forest and timber 309 385 419 475 Paper 1,388 1,367 1,750 1,761 Label 226 223 233 239 Plywood 77 75 102 121 Other operations 21 34 34 52 Internal sales -412 -502 -564 -647 Sales, total 1,841 1,857 2,315 2,358 External sales Energy 24 49 57 45 Pulp 10 10 6 17 Forest and timber 150 152 199 197 Paper 1,355 1,327 1,701 1,699 Label 225 222 233 238 Plywood 73 72 94 111 Other operations 4 25 25 51 External sales, total 1,841 1,857 2,315 2,358 Internal sales Energy 76 87 84 84 Pulp 122 129 194 211 Forest and timber 159 233 220 278 Paper 33 40 49 62 Label 1 1 - 1 Plywood 4 3 8 10 Other operations 17 9 9 1 Internal sales, total 412 502 564 647 EBITDA Energy 41 57 76 58 Pulp -24 -55 9 38 Forest and timber -15 -15 -52 -4 Paper 247 187 189 271 Label 18 6 -1 9 Plywood -5 -23 -5 3 Other operations -24 -29 -38 3 EBITDA, total 238 128 178 378 Operating profit (loss) Energy 36 51 62 49 Pulp -60 -122 -76 60 Forest and timber -18 -18 -63 -38 Paper 85 60 -126 -114 Label 4 -3 -38 1 Plywood -10 -29 -10 -2 Other operations -29 -34 -35 4 Operating profit (loss), total 8 -95 -286 -40 % of sales 0.4 -5.1 -12.4 -1.7 Special items Energy - - - - Pulp - -29 -59 - Forest and timber -8 -10 -2 -33 Paper -10 23 -153 -227 Label -5 - -28 - Plywood - -1 - - Other operations - - 2 4 Special items, total -23 -17 -240 -256 Operating profit (loss) excl.special items Energy 36 51 62 49 Pulp -60 -93 -17 60 Forest and timber -10 -8 -61 -5 Paper 95 37 27 113 Label 9 -3 -10 1 Plywood -10 -28 -10 -2 Other operations -29 -34 -37 - Operating profit (loss) excl. 31 -78 -46 216 special items, total % of sales 1.7 -4.2 -2.0 9.2 EUR million Q2/ Q1/ Q1-Q2/ Q1-Q2/ 2008 2008 2009 2008 Sales Energy 103 105 236 208 Pulp 247 269 271 516 Forest and timber 518 508 694 1,026 Paper 1,727 1,773 2,755 3,500 Label 245 242 449 487 Plywood 150 157 152 307 Other operations 66 48 55 114 Internal sales -678 -692 -914 -1,370 Sales, total 2,378 2,410 3,698 4,788 External sales Energy 20 15 73 35 Pulp 18 22 20 40 Forest and timber 240 233 302 473 Paper 1,657 1,704 2,682 3,361 Label 244 241 447 485 Plywood 139 147 145 286 Other operations 60 48 29 108 External sales, total 2,378 2,410 3,698 4,788 Internal sales Energy 83 90 163 173 Pulp 229 247 251 476 Forest and timber 278 275 392 553 Paper 70 69 73 139 Label 1 1 2 2 Plywood 11 10 7 21 Other operations 6 - 26 6 Internal sales, total 678 692 914 1,370 EBITDA Energy 34 39 98 73 Pulp 35 57 -79 92 Forest and timber 4 4 -30 8 Paper 216 209 434 425 Label 15 11 24 26 Plywood 22 26 -28 48 Other operations -13 -9 -53 -22 EBITDA, total 313 337 366 650 Operating profit (loss) Energy 31 33 87 64 Pulp 38 67 -182 105 Forest and timber 17 25 -36 42 Paper 60 51 145 111 Label 8 3 1 11 Plywood 19 21 -39 40 Other operations -16 -7 -63 -23 Operating profit (loss), 157 193 -87 350 total % of sales 6.6 8.0 -2.4 7.3 Special items Energy - - - - Pulp - - -29 - Forest and timber - -1 -18 -1 Paper - 1 13 1 Label - - -5 - Plywood 3 - -1 3 Other operations -1 5 - 4 Special items, total 2 5 -40 7 Operating profit (loss) excl.special items Energy 31 33 87 64 Pulp 38 67 -153 105 Forest and timber 17 26 -18 43 Paper 60 50 132 110 Label 8 3 6 11 Plywood 16 21 -38 37 Other operations -15 -12 -63 -27 Operating profit (loss) excl. 155 188 -47 343 special items, total % of sales 6.5 7.8 -1.3 7.2 EUR million Q1-Q4/ 2008 Sales Energy 478 Pulp 944 Forest and timber 1,920 Paper 7,011 Label 959 Plywood 530 Other operations 200 Internal sales -2,581 Sales, total 9,461 External sales Energy 137 Pulp 63 Forest and timber 869 Paper 6,761 Label 956 Plywood 491 Other operations 184 External sales, total 9,461 Internal sales Energy 341 Pulp 881 Forest and timber 1,051 Paper 250 Label 3 Plywood 39 Other operations 16 Internal sales, total 2,581 EBITDA Energy 207 Pulp 139 Forest and timber -48 Paper 885 Label 34 Plywood 46 Other operations -57 EBITDA, total 1,206 Operating profit (loss) Energy 175 Pulp 89 Forest and timber -59 Paper -129 Label -26 Plywood 28 Other operations -54 Operating profit (loss), 24 total % of sales 0.3 Special items Energy - Pulp -59 Forest and timber -36 Paper -379 Label -28 Plywood 3 Other operations 10 Special items, total -489 Operating profit (loss) excl.special items Energy 175 Pulp 148 Forest and timber -23 Paper 250 Label 2 Plywood 25 Other operations -64 Operating profit (loss) excl. 513 special items, total % of sales 5.4 Changes in property, plant and equipment EUR million Q1-Q2/Q1-Q2/Q1-Q4/ 2009 2008 2008 Book value at beginning of 5,688 6,179 6,179 period Capital expenditure 109 262 471 Decreases -11 -6 -24 Depreciation -358 -356 -748 Impairment charges -7 - -182 Impairment reversals 4 - - Translation difference and 14 -63 -8 other changes Book value at end of period 5,439 6,007 5,688 Commitments and contingencies EUR million 30.06.2009 30.06.2008 31.12.2008 Own commitments Mortgages 1) 765 89 787 On behalf of associated companies and joint ventures Guarantees for loans 9 10 10 On behalf of others Other guarantees 1 3 2 Other own commitments Leasing commitments for the 20 23 17 next 12 months Leasing commitments for 58 88 56 subsequent periods Other commitments 65 65 62 1) Mortgages relate mainly to giving mandatory security for borrowing from Finnish pension insurance companies. Capital commitments EUR million Completion Total cost By 31.12. 2008 Rebuild of debarking plant, October 2010 30 1 Pietarsaari Waste water treatment plant, September 2010 19 - Blandin Power plant rebuild, December 2011 12 - Schongau Efficiency improvement, September 2009 9 - Chudovo Fibre line improvement, December 2011 10 3 Blandin EUR million Q1-Q2/ After 2009 30.06. 2009 Rebuild of debarking plant, 3 26 Pietarsaari Waste water treatment plant, - 19 Blandin Power plant rebuild, - 12 Schongau Efficiency improvement, 3 6 Chudovo Fibre line improvement, 2 5 Blandin Notional amounts of derivative financial instruments EUR million 30.06.2009 30.06.2008 31.12.2008 Currency derivatives Forward contracts 4,049 6,621 4,598 Options, bought 20 40 - Options, written 25 45 - Swaps 522 502 508 Interest rate derivatives Forward contracts 2,206 3,511 2,668 Swaps 2,996 2,130 2,833 Other derivatives Forward contracts 164 28 172 Options, bought 78 - - Options, written 78 - 78 Swaps 6 5 8 Related party (associated companies and joint ventures) transactions and balances EUR million Q1-Q2/Q1-Q2/Q1-Q4/ 2009 2008 2008 Sales to associated companies 54 67 138 Purchases from associated 229 263 592 companies Non-current receivables at 2 - - end of period Trade and other receivables 22 29 37 at end of period Trade and other payables at 28 22 27 end of period Basis of preparation This unaudited financial report has been prepared in accordance with the accounting policies set out in International Accounting Standard 34 on Interim Financial Reporting and in the Group's Consolidated Financial Statements for 2008. Income tax expense is recognised based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The Group has adopted the following standard: IAS 1 (Revised) Presentation of Financial Statements became effective 1 January 2009. The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity') in the statement of changes in equity, requiring ‘non-owner changes in equity' to be presented separately from owner changes in equity. Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. Following the adoption of the revised standard the Group will present two separate statements (a separate income statement followed by a statement of comprehensive income). Calculation of key indicators Return on equity, %: (Profit before tax - income taxes) / Total equity (average) x 100 Return on capital employed, %: (Profit before tax + interest expenses and other financial expenses) / (Total equity + interest-bearing liabilities (average)) x 100 Earnings per share: Profit for the period attributable to equity holders of the parent company / Adjusted average number of shares during the period excluding treasury shares Key exchange rates for 30.06.2009 31.03.2009 31.12.2008 the euro at end of period USD 1.4134 1.3308 1.3917 CAD 1.6275 1.6685 1.6998 JPY 135.51 131.17 126.14 GBP 0.8521 0.9308 0.9525 SEK 10.8125 10.9400 10.8700 Key exchange rates for 30.09.2008 30.06.2008 31.03.2008 the euro at end of period USD 1.4303 1.5764 1.5812 CAD 1.4961 1.5942 1.6226 JPY 150.47 166.44 157.37 GBP 0.7903 0.7923 0.7958 SEK 9.7943 9.4703 9.3970 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 71-73 of the company's annual report 2008. UPM-Kymmene Corporation Pirkko Harrela Executive Vice President, Corporate Communications UPM, Corporate Communications Media Desk, tel. +358 40 588 3284 communications@upm-kymmene.com DISTRIBUTION NASDAQ OMX Helsinki Ltd Main media www.upm-kymmene.com |
|||
|