UPM-Kymmene - Interim report (Q1 and Q3)

Interim Report Q3/2015: Momentum for improvement continues: UPM shows improved Q3 earnings, cash flow and balance sheet

UPM-Kymmene Corporation      Interim Report         27 October 2015 at 9:40 EET

Interim Report Q3/2015:
Momentum for improvement continues: UPM shows improved Q3 earnings, cash flow
and balance sheet

Q3 2015 compared with Q3 2014
· Earnings per share excluding special items were EUR 0.76 (0.32) and reported
EUR 0.77 (0.34)
· Operating profit excluding special items was EUR 507 million, 20.0% of sales
(235 million, 9.7% of sales)
· Operating profit excluding special items includes a fair value increase of
biological assets in Finland
totalling EUR 265 million, due to adjusted long-term wood price estimates and a
change in the discount
rate
· The profit improvement programme proceeded ahead of schedule, reaching a cost
reduction impact of EUR 36 million in Q3 2015 (annualised EUR 144 million)
· Operating cash flow was strong at EUR 363 million (300 million)

Q1-Q3 2015 compared with Q1-Q3 2014
· Earnings per share excluding special items were EUR 1.38 (0.85) and reported
EUR 1.36 (0.95)
· Operating profit excluding special items was EUR 938 million, 12.4% of sales
(617 million, 8.4% of sales)
· Growth projects progressed well, dividends increased to EUR 373 million (319
million) and net debt decreased to EUR 2,465 million (2,726 million)
· UPM started ramping up the expanded Kymi Pulp mill in Q3, started commercial
deliveries of advanced
renewable diesel and completed the UPM Raflatac expansions in Poland and APAC in
Q2 2015
· UPM closed 800,000 tonnes of graphic paper production capacity in Europe in
Q1-Q2 2015

 Key figures       Q3/2015   Q3/2014 Q2/2015 Q1-Q3/2015(  Q1-Q3/2014 Q1-Q4/2014
                    ((2)                         (2)

 Sales, EURm           2,530   2,415   2,548        7,564      7,337      9,868

 EBITDA, EURm
 (1))                    345     344     317          987        972      1,306

   % of sales           13.6    14.2    12.4         13.0       13.2       13.2

 Operating
 profit (loss),
 EURm                    513     236     206          922        603        674

   excluding
 special items,
 EURm                    507     235     227          938        617        847

   % of sales           20.0     9.7     8.9         12.4        8.4        8.6

 Profit (loss)
 before tax,
 EURm                    498     214     182          861        610        667

   excluding
 special items,
 EURm                    492     213     203          877        558        774

 Profit (loss)
 for the period,
 EURm                    408     182     160          723        504        512

 Earnings per
 share, EUR             0.77    0.34    0.30         1.36       0.95       0.96

   excluding
 special items,
 EUR                    0.76    0.32    0.33         1.38       0.85       1.17

 Operating cash
 flow per share,
 EUR                    0.68    0.57    0.61         1.49       1.47       2.33

 Equity per
 share at end of
 period, EUR           14.89   14.33   14.30        14.89      14.33      14.02

 Gearing ratio
 at end of
 period, %                31      36      35           31         36         32

 Net interest-
 bearing
 liabilities at
 end of period,
 EURm                  2,465   2,726   2,635        2,465      2,726      2,401


1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in fair value of biological assets and wood
harvested, excluding the change in fair value of unrealised cash flow and
commodity hedges, excluding the share of results of associated companies and
joint ventures, and special items.

2) Includes a fair value increase of biological assets in Finland totalling EUR
265 million, due to adjusted long-term wood price estimates and a change in the
discount rate.


Jussi Pesonen, President and CEO comments on the results:"UPM's performance continued to improve during the third quarter. This was
visible in our earnings, cash flow and balance sheet. The results were boosted
by our successful profit improvement programme, which proceeded ahead of
schedule. During the third quarter, we achieved 96 percent of targeted savings.

Most of our businesses enjoyed a positive third quarter. UPM Biorefining
performed well on favourable pulp markets and showed good cost efficiency. UPM
Energy benefited from a good volume of hydropower, which it was able to leverage
on volatile markets. UPM Raflatac continued to improve its performance and was
able to respond to market growth with timely growth investments. UPM Plywood
continued on a strong path.

UPM Paper ENA improved from the previous quarter thanks to lower costs and
seasonally higher volumes. UPM Paper Asia also improved slightly from the second
quarter. Both paper businesses continued to be negatively affected by currency
hedges.

Our growth investment programme is nearing completion and our focus turns to
reaping the benefits in 2016 and beyond. As for major projects, Kymi pulp mill
expansion started the ramp-up and investment in the new UPM Changshu production
unit is being finalised as we speak. In order to secure the positive volume
development in pulp, we also plan to make minor investments in UPM Fray Bentos
pulp mill in conjunction with the annual maintenance shutdown during the fourth
quarter.

Overall, I'm encouraged by our performance during the third quarter. Our
efficiency has increased and our growth projects are responding to market
demand, so we're well-positioned to increase our bottom line going forward".

Outlook for 2015

UPM confirms its full year 2015 outlook:

The improved profitability achieved in 2014 is expected to continue in 2015, and
there are prospects for further improvement. Profitability is underpinned by the
EUR 150 million profit improvement programme,
favourable currencies, as well as the first positive impacts from the company's
growth projects. Profitability is affected by lower publication paper prices and
lower electricity sales prices compared to 2014.

Conference call and press conference

UPM's President and CEO Jussi Pesonen will present the results in a conference
call and a webcast for analysts and investors, held in English language, on 27
October 2015 at 13:15 EET.

Later in the afternoon, Jussi Pesonen will present the results in a press
conference held in Finnish language at the UPM Group Head Office (The Biofore
House) in Helsinki, Alvar Aallon katu 1, at 14:30 EET.

Conference call and webcast details:

The conference call can be participated in either by dialing a number in the
list below or following the webcast online at www.upm.com or 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.com for 12 months after the call.

Conference call title: UPM Interim Report January - September 2015

Direct telephone numbers:

BE: 080058411
DK: +45 823 331 78
FI: +358 981 710 495
FR: 0805 980 143
NO: +47 235 002 11
SE: +46 8 566 427 02
UK: +44 203 194 05 52
US: +1 855 716 15 97

International telephone numbers with a pin code 447217#

AU: +61 284 058 533
AT: +43 192 804 93
CH: +41 225 802 994
CN: +86 400 681 5424
DE: +49 211 971 900 76
ES: +34 911 140 089
HK: +85 230 773 566
IN: +91 226 187 51 56
IR: +353 144 756 82
IT: +39 023 601 38 09
JP: +81 344 556 491
NL: +31 207 095 111
SP: +65 642 983 39

**

It should be noted that certain statements herein, which are not historical
facts, including, without limitation, those regarding expectations for market
growth and developments; expectations for growth and profitability; and
statements preceded by "believes", "expects", "anticipates", "foresees", or
similar expressions, are forward-looking statements. Since these statements are
based on current plans, estimates and projections, they involve risks and
uncertainties which may cause actual results to materially differ from those
expressed in such forward-looking statements. Such factors include, but are not
limited to: (1) operating factors such as continued success of manufacturing
activities and the achievement of efficiencies therein including the
availability and cost of production inputs, continued success of product
development, acceptance of new products or services by the Group's targeted
customers, success of the existing and future collaboration arrangements,
changes in business strategy or development plans or targets, changes in the
degree of protection created by the Group's patents and other intellectual
property rights, the availability of capital on acceptable terms; (2) industry
conditions, such as strength of product demand, intensity of competition,
prevailing and future global market prices for the Group's products and the
pricing pressures thereto, financial condition of the customers and the
competitors of the Group, the potential introduction of competing products and
technologies by competitors; and (3) general economic conditions, such as rates
of economic growth in the Group's principal geographic markets or fluctuations
in exchange and interest rates. For more detailed information about risk
factors, see pages 76-77 of the company's annual report 2014.

**

UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations

UPM, Media Relations
Mon-Fri 9:00-16:00 EET
tel. +358 40 588 3284
media@upm.com


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UPM
Through the renewing of the bio and forest industries, UPM is building a
sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM
Raflatac, UPM Paper Asia, UPM Paper Europe and North America and UPM Plywood.
Our products are made of renewable raw materials and are recyclable. We serve
our customers worldwide. The group employs around 20,000 people and its annual
sales are approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX
Helsinki. UPM - The Biofore Company - www.upm.com

[HUG#1961599]

Attachments:

UPM Interim Report Q3 2015.pdf