2013-10-24 08:35:00 CEST
2013-10-24 08:35:05 CEST
REGULATED INFORMATION
UPM-Kymmene - Interim report (Q1 and Q3)
UPM’s profitability recovered thanks to lower costs in European Paper operations and strong cash flow from operations
UPM-Kymmene Corporation Interim report 24 October 2013 at 9:35 EET
Q3/2013 (compared with Q3/2012)
• Earnings per share excluding special items were EUR 0.26 (0.16), and reported
EUR 0.26 (0.07)
• Operating profit excluding special items was EUR 194 million, 7.8% of sales
(126 million, 4.9%)
• EBITDA was EUR 311 million, 12.6% of sales (313 million, 12.1% of sales)
• 25% of the targeted annualised EUR 200 million cost savings achieved in
Q3/2013
• Operating cash flow was EUR 286 million, net debt decreased to EUR 3,301
million
Q1-Q3/2013 (compared with Q1-Q3/2012)
• Earnings per share excluding special items were EUR 0.64 (0.54), and reported
EUR 0.57 (0.69)
• Operating profit excluding special items was EUR 476 million, 6.4% of sales
(410 million, 5.2%)
• EBITDA was EUR 853 million, 11.4% of sales (995 million, 12.7% of sales)
• UPM announced a new group structure, profit improvement programme and targets
for focused growth initiatives
Key figures Q3/201 Q3/201 Q1-Q3/20 Q1-Q3/20 Q1-Q4/20
3 2 13 12 12
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Sales, EURm 2,472 2,595 7,466 7,835 10,492
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EBITDA, EURm 1) 311 313 853 995 1,312
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% of sales 12.6 12.1 11.4 12.7 12.5
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Operating profit (loss), EURm 187 73 414 341 -1,318
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excluding special items, EURm 194 126 476 410 556
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% of sales 7.8 4.9 6.4 5.2 5.3
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Profit (loss) before tax, EURm 166 52 360 419 -1,271
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excluding special items, EURm 173 105 422 348 471
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Net profit (loss) for the period, 138 36 299 364 -1,122
EURm
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Earnings per share, EUR 0.26 0.07 0.57 0.69 -2.14
--------------------------------------------------------------------------------
excluding special items, EUR 0.26 0.16 0.64 0.54 0.74
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Operating cash flow per share, EUR 0.55 0.60 0.90 1.29 1.98
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Equity per share at end of period, 14.01 18.03 14.01 18.03 14.18
EUR
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Gearing ratio at end of period, % 45 35 45 35 43
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Net interest-bearing liabilities 3,301 3,349 3,301 3,349 3,210
at end of period, EURm
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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.
CEO Jussi Pesonen comments on the third quarter of 2013:
“Our progress in the third quarter was in line with expectations: growth
businesses continued to perform well, and thanks to the recovery in Paper,
Group profitability was restored to the same level as last year. The Paper
business was able to compensate for the challenging market conditions through
lower costs. Our EBITDA reached the same level as last year and our operating
profit excluding special items increased to EUR 194 million (126 million).
Operating cash flow was EUR 286 million (319 million) and we resumed the
downward trend in our net debt.
The Pulp business experienced a solid quarter with good delivery volumes,
taking into account the maintenance shut down on the Fray Bentos mill in
Uruguay. Stable profitability in the Asian paper business continued. In Label,
our growth activities are paying off with volumes more than offsetting the
increased fixed costs. In Energy, profitability continued to be good, despite
low hydropower volumes and the summer.
In Q3, we made a significant effort in our European Paper operations and cost
reductions successfully compensated for the 4% decrease in both prices and
deliveries compared with last year. The recovery from low profitability in the
first half of the year was driven by the decrease in fixed and variable costs,
together with determined cost reduction measures and seasonally higher delivery
volumes. In Q3 we also had a positive impact from unrealised energy hedges.
We announced in August that we will implement a new business structure to drive
a clear change in profitability. We also set ourselves a profit improvement
target of EUR 400 million from performance improvement and focused growth
initiatives.
We have progressed well with the programme. The new organisation is set to
start on 1 November 2013 and we are well on track with the senior management
appointments and planning of the organisation at the next level.
A variety of profit improvement activities in various businesses and operations
resulted in a cost reduction of EUR 13 million in Q3/2013, representing 25% of
the targeted EUR 200 million annualised cost savings.
In October, the State of Uruguay granted us permission to increase the annual
pulp production of the UPM Fray Bentos mill from the current 1.1 million to 1.2
million tonnes. This enabled the immediate start-up of the mill after the
maintenance shutdown and provides a positive outlook for the development of the
mill. We have defined debottlenecking actions in all of our pulp mills, which
will result in a 10 % increase in our 3.3 million tonne pulp capacity over the
next three years.
When planning our future, we have to look beyond the next few quarters.
Therefore our profitability programme includes both short-term actions and
initiatives for the next three years. What we have seen in Q3 are just the
first steps. Our new business structure will sharpen operational focus as we
continue working towards an improved business portfolio,” Pesonen concludes.
Outlook for 2013
Economic growth in Europe is expected to remain low in the latter part of 2013.
This will continue to have a negative impact on the European graphic paper
markets in particular. Growth market economies are expected to fare better,
which is supportive for the global pulp and label materials markets, as well as
paper markets in Asia and wood products markets outside Europe. The current
hydrological situation in Finland is weaker than the long-term average. Based
on forward prices, electricity prices in Finland in H2 2013 are expected to be
slightly higher than in H1 2013.
In H2 2013 compared with H1 2013, the Paper (UPM Paper ENA in the new business
structure) business area is expected to benefit from lower costs, driven partly
by the ongoing cost reduction measures and seasonally stronger demand. The Pulp
(UPM Biorefining) business area will be impacted by annual maintenance stops in
three of the four pulp mills. However, the Fray Bentos maintenance shutdown was
shorter than in previous years. Capital expenditure for 2013 is forecast to be
approximately EUR 400 million.
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 24
October 2013 at 13:15 EET.
Later in the afternoon, UPM's President and CEO Jussi Pesonen will present the
results in a press conference held in Finnish language at UPM Group Head Office
in Helsinki (main entrance, Eteläesplanadi 2) at 14:30 EET.
Conference call details
The conference call can be participated in either by dialling 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. The
presentation is available at www.upm.com for 12 months after the call. We
recommend that participants start dialling in 5-10 minutes prior to ensure a
timely start of the conference.
Conference call title: UPM Q3 Interim Report January - September 2013
DIRECT TELEPHONE NUMBERS:
BE: +32 2404 0642
DK: +45 3544 5579
FI: +358 9817 10462
FR: +33 1707 22026
NO: +47 2350 0204
SE: +46 8519 99363
UK: +44 2031 940544
US: +18 5571 61589
INTERNATIONAL TELEPHONE NUMBERS WITH 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
IR: +353 1 447 5418
IT: +39 02 3600 6663
JP: +81 3 5050 5409
NL: +31 20 716 80 20
SP: +65 3158 2497
PIN: 471708#
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 74-75 of the company's annual report 2012.**
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Corporate Communications
UPM Media Desk
Mon-Fri 9.00-16.00 EET
Phone: +358 40 5883284
E-mail: communications@upm.com
www.twitter.com/UPM_News
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 22,000 people and our annual
sales exceed € 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM -
The Biofore Company - www.upm.com
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