2014-04-29 08:25:00 CEST
2014-04-29 08:25:05 CEST
REGULATED INFORMATION
UPM-Kymmene - Interim report (Q1 and Q3)
Interim report Q1/2014: UPM’s strong Q1 shows momentum towards EUR 400 million profit improvement
UPM-Kymmene Corporation Interim report 29 April 2014 at 09:25 EET
Q1/2014 compared with Q1/2013:
• Earnings per share excluding special items were EUR 0.27 (0.18), and reported
EUR 0.36 (0.09)
• Operating profit excluding special items improved to EUR 196 million, 7.9% of
sales (144 million, 5.8% of sales)
• EBITDA was EUR 313 million, 12.6% of sales (284 million, 11.5% of sales)
• Growth initiatives progressed in UPM Biorefining, UPM Paper Asia and UPM
Raflatac
• 78% of the targeted annualised EUR 200 million cost savings achieved in Q1
2014
• Operating cash flow was EUR 264 million and net debt decreased to EUR 2,777
million
Key figures Q1/201 Q1/201 Q4/201 Q1-Q4/20
4 3 3 13
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Sales, EURm 2,481 2,474 2,588 10,054
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EBITDA, EURm 1) 313 284 302 1,155
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% of sales 12.6 11.5 11.7 11.5
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Operating profit (loss), EURm 191 81 134 548
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excluding special items, EURm 196 144 207 683
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% of sales 7.9 5.8 8.0 6.8
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Profit (loss) before tax, EURm 237 66 115 475
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excluding special items, EURm 176 129 188 610
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Profit (loss) for the period, EURm 193 47 36 335
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Earnings per share, EUR 0.36 0.09 0.06 0.63
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excluding special items, EUR 0.27 0.18 0.27 0.91
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Operating cash flow per share, EUR 0.50 0.20 0.49 1.39
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Equity per share at the end of period, EUR 14.12 14.30 14.08 14.08
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Gearing ratio at the end of period, % 37 42 41 41
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Net interest bearing liabilities at the end of 2,777 3,199 3,040 3,040
period, EURm
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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 share of results of associated companies and joint
ventures, and special items.
Jussi Pesonen, President and CEO comments on the result:
“UPM had a strong first quarter both in terms of financial performance as well
as progress in strategic initiatives.
Operating profit excluding special items increased to EUR 196 million (144
million). Consistent cost savings and improved efficiency in all of our
businesses contributed to the good performance. Signs of recovering market
fundamentals were also apparent in several business areas. Apart from UPM
Biorefining, all businesses fared better compared to the previous quarter and
last year.
We have now achieved EUR 156 million or 78% of the targeted annualised EUR 200
million cost savings. This is also visible in our result. With the current
progress, we expect the full target to be reached by the end of this year.
The strong operating cash flow continued and since the beginning of the year we
were again able to reduce our net debt by EUR 263 million bringing the net debt
level down to EUR 2,777 million.
UPM Paper ENA (Europe and North America) has stepped up its performance
steadily for a third quarter in a row which is evidence of the much improved
competitiveness of our reshaped business platform. Costs are lower, decision
making faster, flexibility has increased and customer focus improved. Also the
decrease in the demand of graphic papers in Europe seems to have somewhat
levelled off.
UPM Plywood continued on a trend of increasing profits. Having made a
successful profitability turnaround with internal measures, the business is now
starting to benefit from more favourable market conditions.
UPM Paper Asia, which is one of our growth businesses, continued good
performance. In Q1 the development was driven primarily by decreased costs and
positive delivery development especially in the labelling materials business.
UPM Raflatac is seeking further efficiency gains and growth through recent
investment decisions and restructuring plans. The first quarter was slightly
better compared to previous quarter and last year, but the business still aims
to improve performance further.
In UPM Energy, the profitability was good. Energy benefitted from decreased
costs, successful hedging and improved hydropower generation in Q1.
Also in UPM Biorefining the profitability remained on a good level. In pulp
business, which makes the most of the Biorefining result, demand trend remained
stable but profitability was negatively impacted by adverse currency
development and Kaukas pulp mill maintenance shut down.
During the first quarter, we also made significant progress in our growth
initiatives:
The Changshu investment in labelling materials was confirmed with improved
capital efficiency and we announced a significant expansion in the UPM Raflatac
self-adhesive label materials factory on the same site.
The announced investment in Kymi pulp mill in Finland provides significant
capacity increase with competitive costs and low risk and contributes to the
10% capacity growth target of UPM's pulp business.
With these growth projects, including the Lappeenranta renewable diesel plant
starting this summer, we are targeting an additional EUR 200 million EBITDA in
the coming three years.
Today all six UPM businesses show good drive to perform. We have made a
significant improvement in our cost structures. We have strong market positions
and competitive assets in all of our businesses. This gives us a strong basis
for driving further the transformation of the company,” said Pesonen.
Outlook for 2014
Growth in the European economy is expected to remain low in 2014, but improve
from last year. Growth in the US and in the developing economies is expected to
continue to outperform Europe.
This environment is expected to be supportive for the global pulp and label
materials demand, as well as paper demand in Asia. The slight improvement in
the European economy is likely to moderate the negative demand development seen
in the European graphic paper market in the past two years and stimulate
European demand for wood products. The current hydrological situation in
Finland is close to the long term average level, and the forward electricity
prices in Finland for H1 2014 are lower than the realised market prices in H1
2013.
UPM's business outlook for H1 2014 is broadly stable. In H1 2014, UPM's
performance is expected to be underpinned by stable overall outlook for UPM
Energy, UPM Raflatac, UPM Paper Asia and UPM Plywood, as compared to H2 2013.
Profitability in UPM Paper ENA is expected to improve due to ongoing cost
reduction measures. In H1 2014 compared to H2 2013, however, performance is
negatively impacted by lower delivery volumes, including seasonal factors.
In UPM Biorefining, capacity additions in the global pulp market are expected
to impact the pulp market balance as the year progresses.
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 29
April 2014 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 (Biofore
House) in Helsinki, Alvar Aallon katu 1, at 14:30 EET.
Conference call details:
The conference call can be participated in either by dialing a number in the
list below or following the webcast online at www.upm.comor through this link.
Only participants who wish to ask questions in the conference call need to dial
in. All participants can view the webcast presentation online. We recommend
that participants start dialing in 5-10 minutes prior to ensure a timely start
of the conference.
The presentation is available at www.upm.comfor 12 months after the call.
Conference call title: UPM - UPM Q1 - Interim report January - March 2014
Direct telephone numbers:
BE: +32 24040642
DK: +4535445586
FI: +358981710465
FR: +33170722026
NO: +4723500213
SE: +46 851999357
UK: +44 2076602079
US: +18557161597
International telephone numbers with a pin:159259#
AU: +61 2 8073 0498
AT: +43 1 928 6161
CH: +41 44 580 65 22
DE: +49 69 2017 44 210
ES: +34 914 142 009
HK: +852 580 83239
IN: +91 22-3301 9422
IT: +39 02 3600 6663
JP: +81 3 5050 5409
NL: +31 20 716 80 20
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations
UPM, Media Desk
9.00-16.00 EET
tel. +358 40 588 3284
media@upm.com
www.twitter.com/UPM_News
www.facebook.com/UPMGlobal
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 21,000 people and its annual
sales are approximately € 10 billion. UPM shares are listed on NASDAQ OMX
Helsinki. UPM - The Biofore Company - www.upm.com
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