2014-10-28 08:35:00 CET
2014-10-28 08:35:18 CET
REGULATED INFORMATION
UPM-Kymmene - Interim report (Q1 and Q3)
Interim report Q3/2014: UPM achieves EUR 200 million profit improvement target ahead of schedule –Net debt at lowest level in 15 years
UPM-Kymmene Corporation Interim report 28 October 2014 at 09:35 EET
Q3 2014 compared with Q3 2013
• Earnings per share excluding special items were EUR 0.32 (0.26), and reported
EUR 0.34 (0.26)
• Operating profit excluding special items increased to EUR 235 million, 9.7%
of sales (194 million, 7.8% of sales), due to the success of the profit
improvement programme
• EBITDA was EUR 346 million, 14.3% of sales (311 million, 12.6% of sales)
• The full targeted annualised cost savings of EUR 200 million were achieved in
Q3 2014, ahead of schedule
Q1-Q3 2014 compared with Q1-Q3 2013
• Earnings per share excluding special items were EUR 0.85 (0.64), and reported
EUR 0.95 (0.57)
• Operating profit excluding special items increased to EUR 617 million, 8.4%
of sales (476 million, 6.4% of sales), due to the success of the profit
improvement programme
• EBITDA was EUR 957 million, 13.0% of sales (853 million, 11.4% of sales)
• Growth projects progressed in UPM Biorefining, UPM Paper Asia and UPM Raflatac
• Strong operating cash flow at EUR 779 million (473 million), net debt
decreased to EUR 2,726 million
Key figures Q3/201 Q3/201 Q2/201 Q1-Q3/2 Q1-Q3/2 Q1-Q4/2
4 3 4 014 013 013
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Sales, EURm 2,415 2,472 2,441 7,337 7,466 10,054
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EBITDA, EURm 346 311 298 957 853 1,155
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% of sales 14.3 12.6 12.2 13.0 11.4 11.5
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Operating profit (loss), EURm 236 187 176 603 414 548
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excluding special items, EURm 235 194 186 617 476 683
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% of sales 9.7 7.8 7.6 8.4 6.4 6.8
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Profit (loss) before tax, 214 166 159 610 360 475
EURm
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excluding special items, EURm 213 173 169 558 422 610
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Profit (loss) for the period, 182 138 129 504 299 335
EURm
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Earnings per share, EUR 0.34 0.26 0.25 0.95 0.57 0.63
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excluding special items, EUR 0.32 0.26 0.26 0.85 0.64 0.91
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Operating cash flow per 0.57 0.55 0.40 1.47 0.90 1.39
share, EUR
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Equity per share at end of 14.33 14.01 13.76 14.33 14.01 14.08
period, EUR
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Gearing ratio at end of 36 45 40 36 45 41
period, %
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Net interest-bearing 2,726 3,301 2,925 2,726 3,301 3,040
liabilities at end of
period, EURm
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Jussi Pesonen, President and CEO comments on the result:
“UPM posted a strong third quarter 2014 thanks to the success of the profit
improvement programme and very good operational efficiency in all businesses.
I'm particularly pleased with our cash flow performance and balance sheet as
this provides the foundation for both dividend growth and the ability to
continue the transformation of the company.
Ournew business structure has been operational for 12 months now and the profit
improvement programme we started with the new organisation has been completed
ahead of schedule. These 12 months have shown that this organisation is capable
of delivering results. Our operating profit has improved by 21% compared to Q3
in 2013 and by 30% during the first nine months of 2014.
Compared to Q3 2013, UPM Paper ENA (Europe and North America), UPM Paper Asia
and UPM Plywood were all successful in their efforts to improve profitability
and lower costs. In UPM Paper ENA, the operating profit also included
energy-related refunds in Europe.
In UPM Biorefining, flawless operational efficiency enabled a good result
despite the headwind from prices.
In addition, UPM Raflatac managed to increase its operational efficiency and
delivery volumes.
In UPM Energy, profitability continued on a good level.
We have reached our 200 M€ profit improvement target ahead of schedule, and we
have identified further improvement potential. Also the growth outlook,
particularly in Europe, remains weak. Therefore, it is time to set a new profit
improvement goal. We are preparing a new plan including fixed and variable cost
savings. We are analysing the means and tools at our disposal and will
communicate a new profit improvement target in the next few weeks.
As for our strategic growth projects, we are well on track in terms of
achieving our target of EUR 200 million of additional EBITDA.
The Lappeenranta biorefinery, the first of its kind in the world, will start
producing clean, advanced renewable diesel during the fourth quarter. In Pulp,
the construction works at the Kymi mill extension are on schedule. Investments
in both wood-free speciality grades and labelling materials in China, as well
as UPM Raflatac's expansion in the self-adhesive labels are also making solid
progress.
Overall, UPM is in a strong position to undertake future opportunities. We have
a new profit improvement programme in preparation and our growth projects
proceed well. Furthermore, our cash flow and balance sheet are very strong,
enabling the continuing transformation of the company,” said Pesonen.
Outlook for 2014
Growth in the European economy has been modest in 2014, but has improved over
last year. The outlook for economic growth in Europe has weakened somewhat
during the autumn. In the US, growth has been stable at a moderate level,
whereas growth is expected to continue in the developing economies.
This environment is expected to be supportive for the global pulp and label
materials demand, as well as paper demand in Asia. The graphic paper demand in
Europe is expected to decline moderately. The current hydrological situation in
Finland is below the long term average level. Based on forward prices,
electricity prices in Finland in H2 2014 are expected to be slightly lower than
in H2 2013.
UPM's business outlook is broadly stable.
In H2 2014, UPM's performance is expected to be underpinned by similar or
slightly better performance in UPM Paper ENA, UPM Paper Asia, UPM Raflatac, UPM
Plywood and UPM Energy, when compared to H2 2013.
UPM Biorefining's performance in H2 2014 compared to H2 2013 continues to be
impacted by lower chemical pulp prices. Commercial production of renewable
diesel at the Lappeenranta refinery is expected to start during Q4 2014, but
the impact on UPM Biorefining's earnings during H2 2014 is expected to be
minor.
Q4 2014 is expected to be impacted by seasonally higher fixed costs, the
year-end stoppages in the company's paper mills as well as the maintenance
shutdown of the Fray Bentos pulp mill, when compared to Q3 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 28
October 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 (The 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 Q3 - Interim Report January - September 2014
Direct telephone numbers:
BE: +32 2404 0642
DK: +45 3544 5588
FI: +358 9 8171 0465
FR: +33 1707 220 26
NO: +47 2350 0213
SE: +46 8519 993 55
UK: +44 2031 940 550
US: +1 855 269 2605
International telephone numbers with a pin:
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
PIN: 712779#
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 73-74 of the company's annual report 2013.
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
www.linkedin.com/company/upm-kymmene
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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