UPM-Kymmene - Interim report (Q1 and Q3)

UPM’s cash flow continued to be strong in Q3 in challenging operating environment

UPM-Kymmene Corporation   Stock exchange release 25 October 2012 at 9.35 EET

Q3/2012

  -- Earnings per share excluding special items were EUR 0.15 (0.19), and
     reported EUR 0.06 (-0.21)
  -- EBITDA was EUR 305 million, 11.8% of sales (331 million, 12.7% of sales)
  -- EBITDA was affected by temporary production disruptions in Pulp
  -- Net debt decreased by EUR 246 million to EUR 3,139 million 

Q1-Q3/2012

  -- Earnings per share excluding special items were EUR 0.51 (0.77), and
     reported EUR 0.45 (0.68)
  -- EBITDA was EUR 968 million, 12.4% of sales (1,082 million, 14.7% of sales)
  -- Fixed costs decreased by EUR 59 million, on comparable basis
  -- Operating cash flow was EUR 662 million (731 million), after restructuring
     payments of EUR 170 million

Key figures                         Q3/201  Q3/201  Q1-Q3/20  Q1-Q3/20  Q1-Q4/20
                                    2       1       12        11        11      
--------------------------------------------------------------------------------
Sales, EURm                          2,578   2,603     7,788     7,382    10,068
--------------------------------------------------------------------------------
EBITDA, EURm 1)                        305     331       968     1,082     1,383
--------------------------------------------------------------------------------
% of sales                            11.8    12.7      12.4      14.7      13.7
--------------------------------------------------------------------------------
Operating profit (loss), EURm           69    -159       316       328       459
--------------------------------------------------------------------------------
excluding special items, EURm          122     136       391       535       682
--------------------------------------------------------------------------------
% of sales                             4.7     5.2       5.0       7.2       6.8
--------------------------------------------------------------------------------
Profit (loss) before tax, EURm          49    -188       291       323       417
--------------------------------------------------------------------------------
excluding special items, EURm          102     107       331       462       572
--------------------------------------------------------------------------------
Net profit (loss) for the period,       33    -109       237       355       457
 EURm                                                                           
--------------------------------------------------------------------------------
Earnings per share, EUR               0.06   -0.21      0.45      0.68      0.88
--------------------------------------------------------------------------------
excluding special items, EUR          0.15    0.19      0.51      0.77      0.93
--------------------------------------------------------------------------------
Operating cash flow per share, EUR    0.61    0.54      1.26      1.40      1.99
--------------------------------------------------------------------------------
Shareholders' equity per share at    14.14   13.78     14.14     13.78     14.22
 end of period, EUR                                                             
--------------------------------------------------------------------------------
Gearing ratio at end of period, %       42      52        42        52        48
--------------------------------------------------------------------------------
Net interest-bearing liabilities     3,139   3,758     3,139     3,758     3,592
 at end of period, EURm                                                         
--------------------------------------------------------------------------------

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. 


Jussi Pesonen, President and CEO, comments on the result:

“UPM's business environment in the third quarter of 2012 was impacted by the
decelerating global economy. Despite these circumstances, I am pleased that our
cash flow continued to be strong and we were able to decrease our net debt and
further strengthen our balance sheet. Performance in our growth businesses
remained good, but Paper, Plywood and Timber continued to suffer from weak
profitability. The Group's operating profit excluding special items was EUR 122
million (Q2 2012 EUR 118 million or Q3 2011 EUR 136 million). 

Energy, Label and Asian Paper businesses maintained strong profitability during
the third quarter. Ample hydropower boosted Energy's performance and Label
experienced positive cost development. Pulp profitability was affected by
temporary process disruptions at the Pietarsaari mill. 

Although both deliveries and prices in Paper were in line with expectations, we
were not able to adjust Paper's cost level enough to improve profitability in
the current operating environment. The development of the logistics and energy
costs in particular was disappointing. The sale of the packaging paper business
also affected the business' EBITDA. 

We will use our full toolkit to get Paper's performance on the right track. Our
main focus in the Paper business is to improve margins to maximise cash flow.
We have already started to review our costs, margins and structures to make the
necessary turnaround in Paper and we have informed our publication paper
customers of price increases. We will also investigate consolidation
opportunities, and carry out restructuring and capacity closures when needed. 

Meanwhile, we have continued the consistent implementation of the strategic
actions in our growth businesses. In Label we completed the acquisition of
Gascogne Laminates operations in Switzerland, following the strategy to grow in
special labelstock products. Construction of the Lappeenranta wood-based
biodiesel refinery, as well as preparations for the woodfree speciality paper
machine investment in China are proceeding as planned,” Pesonen concludes. 


Outlook for 2012

Global economic growth has slowed down during 2012. The European economy is
expected to be in recession in the second half of 2012. There are considerable
uncertainties related to both to the European sovereign debt problems and to
the growth prospects of the Chinese and other emerging economies. 

In Q4 2012, UPM's operating profit excluding special items is expected to be
about the same, or lower than in Q3 2012. Operating profit excluding special
items for the full year 2012 is expected to be lower than in 2011. 

UPM's cost level is expected to remain stable in Q4 2012 compared with Q3 2012.
The realisation of the Myllykoski cost synergies is expected to continue as
planned, and cost synergies of more than EUR 150 million are expected to impact
UPM's full-year 2012 results. 

Capital expenditure for 2012 is forecast to be approximately EUR 350 million.

The full outlook is available in the Interim report.


For more information, please contact:
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001
Mr Tapio Korpeinen, CFO, UPM, tel. +358 204 15 0004


Webcast and press conference:
UPM's President and CEO Jussi Pesonen will present the Interim Report in a
conference call and webcast for analysts and investors, held in English
language, on 25 October at 13:00 Finnish time (11:00 BST, 06:00 EDT). 

Later in the afternoon, UPM's President and CEO Jussi Pesonen will present the
Interim Report in a press conference held in Finnish language at UPM Group Head
Office in Helsinki (main entrance, Eteläesplanadi 2) on 25 October, at 14:15
Finnish time (12:15 BST, 07:15 EDT). 

Conference call and webcast details:
The conference call can be participated either by dialing a number in the list
below or following the webcast online at www.upm.com. 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 to the conference. 


Conference call title: UPM-Kymmene Corporation Interim Report January-September
2012 
Conference ID: 914127
Phone numbers:
Participant - US:   +1 334 323 6201
Participant - Australia LC:   +61 (0)28 2239 543
Participant - Hong Kong LC:  +852 300 278 26
Participant - Japan LC:   +81 (3)45 8001 94
Participant - Malaysia LC:   +60 (0)37 7124 471
Participant - New Zealand LC:  +64 (0)99 1924 18
Participant - Singapore LC:  +65 6823 2169
Participant - South Korea LC:  +82 (0)23 4831 070
Participant - Taiwan LC:   +886 (0)22 1626 701
Participant - Austria:   +43 (0)268 2205 6292
Participant - Belgium:   +32 (0)2 290 14 07
Participant - Czech Republic:  +420 (2)3900 0635
Participant - Denmark:   +45 3271 4607
Participant - Finland:   +358 (0)9 2313 9201
Participant - France:   +33 (0)1 7099 3208
Participant - Germany:   +49 (0)695 8999 0507
Participant - Hungary:   +36 (0)618 8932 15
Participant - Ireland:   +353 (0)1 4364 106
Participant - Italy:   +39 023 0350 9003
Participant - Luxembourg:   +352 270 0073 408
Participant - Netherlands:   +31 (0)20 7965 008
Participant - Norway:   +47 2156 312 0
Participant - Spain:   +34 917 889 507
Participant - Sweden:   +46 (0)8 5052 0110
Participant - Switzerland (Geneva):  +41 (0)2 2592 7007
Participant - Switzerland (Zurich):  +41 (0)434 5692 61
Participant - UK:   +44 (0)20 7162 0077

The webcast can be replayed at www.upm.com for 12 months.

***

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 103-105 of the company's annual report 2011. 

***

UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Corporate Communications

UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284
media@upm.com
www.twitter.com/UPM_News

Attachments:

UPM Interim Report_Q3_2012.pdf