2009-02-05 08:30:00 CET
2009-02-05 08:30:04 CET
REGULATED INFORMATION
UPM-Kymmene - Financial Statement Release
UPM's Financial Review 2008
UPM-Kymmene Corporation Annual Financial Statement 5 February 2009 at 09:30
Earnings per share for 2008 were EUR -0.35 (0.16), excluding special items EUR
0.42 (1.00). Operating profit for the year was EUR 24 million (483 million),
excluding special items EUR 513 million (835 million).
Operating loss for the fourth quarter was EUR 286 million (profit of EUR 142
million), excluding special items operating loss was EUR 46 million (profit of
EUR 194 million). Operating cash flow was EUR 628 million (867 million).
High cost of wood and energy lowered profitability.
Key figures
Q4/ Q4/ Q1-Q4/ Q1-Q4/
2008 2007 2008 2007
Sales, EUR million 2,315 2,512 9,461 10,035
EBITDA, EUR million 1) 178 351 1,206 1,546
% of sales 7.7 14.0 12.7 15.4
Operating profit -286 142 24 483
(loss), EUR million
excluding special -46 194 513 835
items, EUR million
% of sales -2.0 7.7 5.4 8.3
Profit (loss) -360 92 -201 292
before tax, EUR million
excluding special -120 144 282 644
items, EUR million
Net profit (loss) -286 29 -180 81
for the period, EUR million
Earnings per share, -0.56 0.06 -0.35 0.16
EUR
excluding special -0.19 0.24 0.42 1.00
items, EUR
Diluted earnings -0.56 0.06 -0.35 0.16
per share, EUR
Return on equity, % neg. 1.7 neg. 1.2
excluding special neg. 7.1 3.4 7.4
items, %
Return on capital neg. 5.1 0.2 4.3
employed, %
excluding special neg. 6.9 4.6 7.4
items, %
Operating cash flow 0.69 0.57 1.21 1.66
per share, EUR
Gearing ratio at 71 59 71 59
end of period, %
Shareholders' 11.74 13.21 11.74 13.21
equity per share
at end of period, EUR
Net interest-bearing 4,321 3,973 4,321 3,973
liabilities at end
of period, EUR million
Capital employed at 11,193 11,098 11,193 11,098
end of period, EUR million
Capital expenditure, 113 173 551 708
expenditure, EUR million
Personnel at end of 24,983 26,352 24,983 26,352
period
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges and excluding the change in value of biological assets and the share of
results of associated companies and joint ventures and special items.
The market in 2008
The two halves of 2008 were very different in nature. The year 2008 started
with expectations of slower growth globally despite increasing commodity prices
and rising inflation. The picture changed in late summer with the global
financial crisis and downward revised economic forecasts. Consumer confidence
in North America and Europe dropped dramatically.
Volatility characterised currency markets throughout the year. The dollar
increased in value against the euro in the early part of the year, then
decreased but rebounded again at the very end of the year. The UK pound and
Swedish krona devalued against the euro, particularly in the last couple of
months of the year.
Prices for commodities and raw materials kept rising in the early part of the
year. However, rapidly deteriorating demand has depressed prices since late
summer. In early December, crude oil prices plunged to less than a third from
the record high level reached in July. Demand and prices for pulp have declined
sharply since April due to lower paper and board demand. Wood raw material
prices in Finland increased in the beginning of the year. Demand for wood raw
material was still at a high level, but since early summer prices decreased due
to lower demand. The threat of prohibitive export duties for wood raw material
from Russia disturbed the wood markets in Finland during the year. Production
costs for the forest industry increased considerably.
Global advertising expenditure declined on an annual basis from the previous
year, but with large differences between different regions. Print advertising
declined in value, but held its place as the second largest major medium. In
value terms, newspapers and magazines suffered, but direct mail continued to
grow. As a consequence of rapid downturn in the economy and a decline in print
advertising the demand for graphic papers in Europe and North America declined.
In response to the weak market balance, significant paper capacity closures and
production curtailments were made both in Europe and in North America during
2008.
The global retail sector faced a significant pull back in consumer spending,
slowing down the growth of the sector. This affected packaging needs for
consumer goods as well as the demand for self-adhesive label materials and
advertising in the retail sector.
Housing markets deteriorated globally, taking a sharp downturn after the summer
months and leading to a very rapid decrease in construction toward the end of
the year. This influenced the markets for building materials, including those
for wood based materials.
New business structure
In December, UPM adopted a new business structure. The company now consists of
three Business Groups: Energy and pulp, Paper, and Engineered materials.
The company now reports financial information for the following seven business
areas: Energy, Pulp, Forest and timber, Paper, Label, Plywood and Other
operations. The comparative figures have been revised to correspond with the
new structure.
Results
Q4 of 2008 compared with Q4 of 2007
Sales for the fourth quarter of 2008 were EUR 2,315 million, 8% lower than the
EUR 2,512 million for the fourth quarter of 2007. Sales decreased due to lower
deliveries across all of UPM's businesses.
The operating loss was EUR 286 million, 12.4% of sales (profit of EUR 142
million, 5.7% of sales). The operating loss excluding special items was EUR 46
million, 2.0% of sales (profit of EUR 194 million, 7.7% of sales). Operating
loss includes charges net of EUR 240 million as special items. This includes
restructuring charges of EUR 143 million related to the closure of the Kajaani
paper mill, EUR 59 million related to the closure of the Tervasaari pulp mill,
charges of EUR 28 million related to restructuring of UPM Raflatac's European
operations, and other restructuring charges net of EUR 10 million.
Profitability declined clearly from the same period last year. With the
exception of Energy, all of UPM's business areas showed lower profitability.
Lower deliveries in all of UPM's business areas and higher energy and wood
costs had a negative impact on the results. Energy costs increased
approximately EUR 50 million. Wood costs increased by almost EUR 60 million
including a write down of EUR 36 million in wood inventories. Extensive
production downtime was taken in paper, pulp and plywood mills and sawmills,
which decreased cost efficiency of production during the quarter. Product
inventories decreased significantly. In addition, the change in the fair value
of biological assets net of wood harvested was EUR 2 million negative compared
to EUR 47 million positive a year before.
The average paper price in euro increased by approximately 6% from the same
period last year. Timber and plywood prices declined, reducing profitability in
the respective business areas. The average price for label materials increased
in all markets.
The share of the results of associated companies and joint ventures was EUR -16
million (2 million).
The loss before tax was EUR 360 million (profit of EUR 92 million) and
excluding special items EUR 120 million (profit of EUR 144 million). Interest
and other finance costs net were EUR 60 million (46 million). Exchange rate and
fair value gains and losses resulted in a loss of EUR 14 million (loss of EUR 4
million).
Income taxes were EUR 74 million positive (63 million negative). The impact on
taxes from special items was EUR 51 million positive (40 million negative).
The loss for the fourth quarter was EUR 286 million (profit of EUR 29 million)
and earnings per share were EUR -0.56 (0.06). Earnings per share excluding
special items were EUR -0.19 (0.24).
2008 compared with 2007
Sales for 2008 were EUR 9,461 million, 6% lower than in 2007 (10,035 million).
Sales decreased due to lower deliveries across all of UPM's businesses.
The operating profit was EUR 24 million (483 million), 0.3% of sales (4.8%).
The operating profit excluding special items was EUR 513 million, 5.4% of sales
(EUR 835 million, 8.3% of sales). The operating profit includes charges net of
EUR 489 million as special items (charges of EUR 352 million). In Pulp special
items of EUR 59 million relate to the closure of the Tervasaari pulp mill in
December. This includes impairment charges of EUR 51 million and other costs
EUR 8 million. In Forest and timber special items of EUR 36 million include
impairment charges of EUR 31 million related to the Finnish sawmilling
operations recognised in September, and other restructuring costs of EUR 5
million. Special items in Paper amounted to EUR 379 million including a
goodwill impairment charge of EUR 230 million recognised in September. In
addition, impairment charges of EUR 101 million and other restructuring costs
of EUR 42 million were booked related to the closure of the Kajaani paper mill
in December. Other restructuring costs were, net of EUR 6 million. In Label
special items of EUR 28 million recorded in December, relate to restructuring
measures in Europe. The costs include impairment charges of EUR 7 million and
other restructuring costs of EUR 21 million. Special items of EUR 3 million in
Plywood relate to income on disposals. In Other operations special items
include an adjustment of EUR 5 million to sales of disposals of 2007 and other
restructuring income net of EUR 5 million. Restructuring costs have
approximately EUR 70 million negative cash effect mainly for the year 2009.
Profitability declined clearly from last year. With the exception of Energy,
all of UPM's business areas showed lower profitability. The main reason for the
lower profitability was higher wood costs. Wood costs were approximately
EUR 220 million higher than last year, including a write down of EUR 36 million
in wood inventory made in the fourth quarter. Energy costs increased
approximately EUR 100 million. Fixed costs declined markedly. The net increase
in cost level was above 2%.
Towards the end of the year deliveries declined significantly from last year
across all of UPM's businesses. In Paper, higher average paper prices offset
the impact of lower paper deliveries. In the fourth quarter, UPM took extensive
production downtime in paper, pulp and plywood mills and sawmills, which
decreased cost efficiency of production during the quarter.
UPM's paper inventories at the end of the year were approximately 200,000
tonnes lower than a year ago.
The change in the fair value of biological assets net of wood harvested was
EUR 50 million (79 million).
The share of the results of associated companies and joint ventures was EUR 62
million (43 million).
The loss before tax was EUR 201 million (profit of EUR 292 million) and
excluding
special items a profit of EUR 282 million (644 million). Interest and other
finance costs were EUR 202 million (191 million) net. Exchange rate and fair
value gains and losses resulted in a loss of EUR 25 million (loss of EUR 2
million).
Income taxes were EUR 21 million positive (EUR 211 million negative). The
impact on taxes from special items was EUR 86 million positive (EUR 87 million
negative). The effective tax rate excluding the impact of special items was 23%
(22%).
The loss for the year was EUR 180 million (profit of EUR 81 million) and
earnings per share were EUR -0.35 (0.16). Earnings per share excluding special
items were EUR 0.42 (1.00). Operating cash flow per share was EUR 1.21 (1.66).
Return on capital employed was 0.2% (4.3%) and excluding special items 4.6%
(7.4%).
Financing
Cash flow from operating activities, before capital expenditure and financing,
was EUR 628 million (867 million). The increase in net working capital amounted
to EUR 132 million (204 million), which is attributable primarily to wood
procurement
operations. The cash flow from operations was also negatively affected by a
one-time cash contribution for changing the UK pension plans from defined
benefit to defined contribution, and settlement of the restructuring provisions
related to the closure of the Miramichi paper mill in 2007.
The gearing ratio as of 31 December was 71% (59% on 31 December 2007). Net
interest-bearing liabilities at the end of the year came to EUR 4,321 million
(3,973 million). The average maturity of interest-bearing liabilities at year
end was 5.7 years (6.1 years).
At the end of the year the ratings for UPM's rated bonds were BBB- by S&P, and
Baa3 by Moody's under review for a possible downgrade.
Personnel
In 2008, UPM had an average of 26,017 employees (28,246). At the beginning of
the year the number of employees was 26,352, and at the end of the year it was
24,983. The reduction by 1,369 persons is mostly attributable to the
Profitability Programme.
Capital expenditure
In 2008, capital expenditure, excluding acquisitions and share purchases, was
EUR 532 million, 5.6% of sales (EUR 683 million, 6.8% of sales). Including
acquisitions and share purchases, capital expenditure was EUR 551 million, 5.8%
of sales (EUR 708 million, 7.1%). Operational capital expenditure was EUR 235
million (268 million).
In April, UPM signed a shareholders' agreement to form a 50/50 joint venture
company with the Russian Sveza Group to build a forest industry facility in the
Vologda region of Northwest Russia. The letter of intent was signed in December
2007. The planned industrial complex would include a modern pulp mill, a
sawmill and an OSB building panels mill. The final investment decision is
subject to satisfactory outcome of the final feasibility study and the
necessary approvals from the relevant authorities.
The new self-adhesive label materials factory in Dixon, Illinois, started
operations in February. The total investment cost was USD 100 million.
The rebuild of the recovery plant at the Kymi pulp mill was completed in June.
The new plant improves the energy self-sufficiency and efficiency of the mill.
In addition, CO2 and other emissions are reduced. The total cost of the project
was EUR 360 million.
The new self-adhesive label materials factory in Wroclaw, Poland, started
operations in November. The total investment cost was EUR 94 million.
UPM is building a new renewable energy power plant at the Caledonian mill in
Irvine, Scotland. The total investment cost is estimated to be EUR 75 million.
The new power plant is scheduled to start in the second quarter of 2009.
In December, Teollisuuden Voima Oy informed UPM that the supplier of the
nuclear power plant Olkiluoto 3 has filed a request for arbitration concerning
the delay and related costs. UPM's associated company Pohjolan Voima Oy is with
58.12% a majority shareholder of Teollisuuden Voima Oy.
Restructuring
The Profitability Programme for 2006-2008 was completed. By the end of 2008,
reduction of personnel was 4,300 and the achieved annual cost savings are
approximately EUR 190 million compared with the cost level of 2006.
In addition to the above programme, UPM has continued with new initiatives and
actions to improve its profitability. In December 2008 UPM closed uncompetitive
paper and pulp capacity in Finland, including the Kajaani paper mill (annual
capacity 640,000 tonnes of newsprint, special newsprint and uncoated magazine
papers) and the Tervasaari pulp mill (annual capacity 210,000 tonnes of pulp).
The closures will affect around 700 employees. The Kajaani and Tervasaari
closures are expected to have a positive EBITDA impact.
In June, UPM closed down the Luumäki timber components and planing mill.
In December, UPM closed down the Leivonmäki sawmill (annual capacity of 80,000
cubic metres of sawn timber).
In September UPM announced a plan for measures to improve efficiency in all of
the company's business groups and functions. A preliminary estimate of the
number of employees affected by these measures is around 950. The streamlining
of operations is expected to result in annual savings of about EUR 70 million
in fixed costs. Negotiations with the employee representatives have begun and
expected to be concluded during the first half of 2009.
In November, UPM's Label business area announced plans to restructure its
European operations. The plan includes reduction of coating capacity, closing
down a number of self-adhesive labelstock production lines and reduction in
slitting capacity in the UK, France, Germany, Hungary and Finland. The number
of employees affected by this programme is estimated to be approximately 340.
The final decisions will be taken after consultation and negotiation with the
employees in the relevant countries.
The planned actions will improve the cost competitiveness and profitability of
UPM's Label business area. The aim is to reduce operating costs annually by
about EUR 25 million, with no material impact on the sales.
Shares
In 2008, UPM shares worth, in total EUR 10,549 million (16,472 million) were
traded on the NASDAQ OMX Helsinki stock exchange. The highest quotation was
EUR 13.87 in January and the lowest EUR 8.15 in December.
The company's ADSs are traded on the US over-the-counter (OTC) market under a
Level 1 sponsored American Depositary Receipt programme.
The Annual General Meeting held on 26 March 2008 approved a proposal to
authorise the Board of Directors to decide to buy back not more than 51,000,000
own shares. The authorisation is valid for 18 months from the date of the
decision.
On the basis of the decisions of the Annual General Meeting of 27 March 2007,
the Board has the authority to decide on a free issue of shares to the company
itself so that the total number of shares to be issued to the company combined
with the number of own shares bought back under the buyback authorisation may
not exceed 1/10 of the total number of shares of the company.
In addition, the Board has the authority to decide to issue shares and special
rights entitling the holder to shares of the company. The number of new shares
to be issued, including shares to be obtained under special rights, shall be no
more than 250,000,000. Of that, the maximum number that can be issued to the
company's shareholders based on their pre-emptive rights is 250,000,000 shares
and the maximum amount that can be issued deviating from the shareholders'
pre-emptive rights in a directed share issue is 100,000,000 shares. The maximum
number of new shares to be issued as part of the company's incentive programmes
is 5,000,000. Furthermore, the Board is authorised to decide on the disposal of
own shares. To date, this authorisation has not been used. These authorisations
of the 2007 Annual General Meeting will remain valid for no more than three
years from the date of the decision.
The meeting 27 March 2007 also decided on granting share options in connection
with the company's share-based incentive plans. In option programmes 2007A,
2007B and 2007C, the total number of share options is no more than 15,000,000,
and they will entitle to subscribe for, in total, no more than 15,000,000 new
shares of the company.
Apart from the above, the Board of Directors has no current authorisation to
issue shares, convertible bonds, or share options.
In 2008, 7,400,768 shares were subscribed for through exercising of outstanding
share options. The number of shares entered in the Trade Register on 31
December 2008 was 519,970,088. Through the issuance authorisation and share
options, the number of shares may increase to a maximum of 790,970,088.
At the end of the year the company held 15,944 of its own shares, 0.003% of the
total number of shares, which have been granted under the Group's share reward
scheme. These shares have been returned in connection with termination of
service contracts.
The company has received the following notifications from shareholders: Norges
Bank on 24 October 2008 held 5.01% of the share capital and the voting rights.
Franklin Resources, Inc. held 9.94% of the voting rights on 3 November 2008.
Listing of UPM 2005H stock options on the NASDAQ OMX Helsinki stock exchange
commenced on 1 October 2008.
Company directors
At the Annual General Meeting Mr Matti Alahuhta, President and CEO of KONE
Corporation, and Mr Björn Wahlroos, President and CEO of Sampo plc, were
elected to the Board of Directors as new members. In addition, Mr Michael C.
Bottenheim, LLM, MBA; Mr Berndt Brunow, Board member of Oy Karl Fazer Ab; Mr
Karl Grotenfelt, LLM, Chairman of the Board of Directors of Famigro Oy; Dr
Georg Holzhey, former Executive Vice President of UPM and Director of G.
Haindl'sche Papierfabriken KGaA; Ms Wendy E. Lane, Chairman of American
investment firm Lane Holdings, Inc.; Mr Jussi Pesonen, President and CEO of
UPM; Ms Ursula Ranin, LLM, B.Sc. (Econ.); and Mr Veli-Matti Reinikkala,
President of ABB Process Automation Division, were re-elected as members of the
Board of Directors. The term of office of the members of the Board of Directors
lasts until the end of the next Annual General Meeting.
At the assembly meeting of the Board of Directors, Mr Björn Wahlroos was
elected as Chairman, and Mr Berndt Brunow and Mr Georg Holzhey were elected as
Vice Chairmen. In addition, the Board of Directors elected from its members the
Audit Committee with Mr Michael C. Bottenheim as Chairman, and Ms Wendy E. Lane
and Mr Veli-Matti Reinikkala as members. The Human Resources Committee was
elected, with Mr Berndt Brunow as Chairman, and Mr Georg Holzhey and Ms Ursula
Ranin as members. Furthermore, the Nominating and Corporate Governance
Committee was elected, with Mr Björn Wahlroos as Chairman, and the other
members being Mr Matti Alahuhta and Mr Karl Grotenfelt.
Litigation
Certain competition authorities are continuing investigations into alleged
antitrust activities with respect to various products of UPM. The authorities
have granted UPM conditional full immunity with respect to certain conduct
disclosed to them. UPM has settled or agreed to settle the class-action
lawsuits in the US except for those filed by indirect purchasers of labelstock.
The remaining litigation matters may last several years. No provisions have
been made in relation to these investigations.
Events after the balance sheet date
On 14 January 2009, UPM's associated company Oy Metsä-Botnia Ab announced the
permanent closure of the Kaskinen pulp mill in the first quarter of 2009. The
special charges resulting from the closure will reduce UPM's associated company
results by approximately EUR 27 million in the first quarter of 2009. UPM's
share in Oy Metsä-Botnia Ab is 47%.
On 15 January 2009, UPM sold its former paper mill and related assets in
Miramichi, New Brunswick, Canada, to Umoe Solar AS of Norway. The sale includes
the closed paper mill site, woodlands operations, and two sawmills located
nearby in Bathurst and Blackville. UPM records an income of approximately
EUR 20 million on the sale as a special item in the first quarter of 2009.
The Group's management is not aware of any other significant events occurring
after 31 December 2008.
Outlook for 2009
Economic growth in UPM's main markets is forecast to contract. This will have
an impact on consumer demand, construction activity, and advertising
expenditure in media and thus on demand for graphic papers.
Due to estimated lower demand for most of UPM's products, UPM is curtailing
production. The company seeks cost savings through flexible ways of operating
mills and units.
Higher external sales volume is forecast in Energy for 2009 due to lower
consumption in own production. Average market price for electricity is
estimated to be lower.
UPM's paper deliveries for 2009 are forecast to be lower than last year.
Deliveries for the first quarter of the year are estimated to be clearly lower
than in the fourth quarter of 2008. In the beginning of the year the average
price for UPM's papers is higher than during the fourth quarter 2008.
Demand for self-adhesive labelstock is estimated to decline slightly from 2008
in all markets. On average labelstock prices are expected to remain about the
same as last year.
Demand for birch and spruce plywood is forecast to be clearly lower than last
year. Cost of wood raw material will gradually be lower but also pressure on
sales prices continues.
For the group wood and other raw material costs are expected to be lower than
2008, however, main impact would be during the second half of the year. Also
lower fixed costs are expected. Capital expenditure for 2009 is forecast to
be about EUR 400 million.
Dividend for 2008
The Board of Directors will propose to the Annual General Meeting to be held on
25 March 2009 that a dividend of EUR 0.40 per share be paid in respect of the
2008 financial year (EUR 0.75). It is proposed that the dividend be paid on 8
April 2009.
Financial information in 2009
The Annual Report for 2008 will be published on the company's website
www. upm-kymmene.com on 27 February 2009. The printed Annual Report
will be available in the week beginning 16 March 2009.
Interim Report January-March 2009: 29 April 2009
Interim Report January-June 2009: 4 August 2009
Interim Report January-September 2009: 29 October 2009
Business area reviews
Energy
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
08 08 08 08 07 07 07 07
Sales, EUR million 141 129 103 105 112 89 81 97
EBITDA, EUR million 1) 76 58 34 39 43 24 20 31
% of sales 53.9 45.0 33.0 37.1 38.4 27.0 24.7 32.0
Share of results of -11 -8 -2 -5 -4 -6 -8 1
associated companies and
joint ventures, EUR million
Depreciation, -3 -1 -1 -1 -1 -1 -1 -3
amortisation and
impairment charges,
EUR million
Operating profit, 62 49 31 33 38 17 11 29
EUR million
% of sales 44.0 38.0 30.1 31.4 33.9 19.1 13.6 29.9
Special items, EUR - - - - - - - -
million
Operating profit 62 49 31 33 38 17 11 29
excl. special
items, EUR million
% of sales 44.0 38.0 30.1 31.4 33.9 19.1 13.6 29.9
Electricity 2,731 2,653 2,344 2,439 2,716 2,576 2,415 2,642
deliveries, MWh
Q1-Q4/ Q1-Q4/
08 07
Sales, EUR million 478 379
EBITDA, EUR million 1) 207 118
% of sales 43.3 31.1
Share of results of -26 -17
associated companies and
joint ventures, EUR million
Depreciation, -6 -6
amortisation and
impairment charges,
EUR million
Operating profit, 175 95
EUR million
% of sales 36.6 25.1
Special items, EUR - -
million
Operating profit 175 95
excl. special items,
EUR million
% of sales 36.6 25.1
Electricity 10,167 10,349
deliveries, MWh
Capital employed 951 994
(average), EUR million
ROCE (excl. special 18.4 9.6
items), %
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint venture, and special
items.
Q4 of 2008 compared with Q4 of 2007
The operating profit excluding special items for Energy was EUR 62 million, EUR
24 million higher than last year (38 million). Sales totalled EUR 141 million
(112 million), whereof EUR 57 million was external sales (25 million). The
electricity sales volume was 2.7 TWh in the quarter (2.7 TWh).
Profitability improved compared with the same period last year. The main
reasons were the high volume of hydropower and the higher average electricity
sales price. The average electricity sales price increased by 29% to EUR
42.3/MWh (32.9/MWh).
2008 compared with 2007
The operating profit excluding special items for Energy was EUR 175 million,
EUR 80 million higher than in 2007. Sales totalled EUR 478 million (379
million), whereof EUR 137 million was external sales (59 million). The
electricity sales volume was 10.2 TWh (10.3 TWh).
Profitability improved from the year 2007, mainly due to the higher average
electricity sales price. The average electricity sales price increased by 33%
to EUR 37.5/MWh (28.2/MWh). The hydropower volume increased by 21% to 3.8 TWh,
which had a positive impact on the average cost of procuring electricity.
Market review
In 2008, energy markets were characterised by high volatility. The average
price in the Nordic electricity exchange rose by 60% in 2008 from the previous
year, to EUR 44.7/MWh (27.9/MWh). In the early part of the year oil and coal
prices increased rapidly in the global energy markets. At the same time CO2
emission allowance prices increased compared with 2007 as the second phase of
the EU emission trading scheme started. The combination of higher fuel and
CO2 prices drove the increase in electricity market prices.
In the latter part of the year fossil fuel, CO2 emission allowance and
electricity forward prices started to decline. In December the spot electricity
price in the Nordic power exchange was EUR 44.5/MWh and the one year forward
price averaged EUR 39.6/MWh.
Pulp
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q4/
08 08 08 08 07 07 07 07 08
Sales, EUR million 200 228 247 269 187 208 208 205 944
EBITDA, EUR million 1) 9 38 35 57 19 50 57 62 139
% of sales 4.5 16.7 14.2 21.2 10.2 24.0 27.4 30.2 14.7
Share of results of -4 44 20 26 6 19 12 21 86
associated companies
and joint ventures,
EUR million
Depreciation, -73 -22 -17 -16 -16 -13 -58 -14 -128
amortisation and
impairment charges, EUR million
Operating profit, -76 60 38 67 9 56 11 69 89
EUR million
% of sales -38.0 26.3 15.4 24.9 4.8 26.9 5.3 33.7 9.4
Special items, EUR -59 - - - - - -43 - -59
million 2)
Operating profit -17 60 38 67 9 56 54 69 148
excl. special items,
EUR million
% of sales -8.5 26.3 15.4 24.9 4.8 26.9 26.0 33.7 15.7
Pulp deliveries, 421 480 527 554 446 492 501 488 1,982
1,000 t
Capital employed 1,674
(average), EUR million
ROCE (excl. special items), % 8.8
Q1-Q4/
07
Sales, EUR million 808
EBITDA, EUR million 1) 188
% of sales 23.3
Share of results of 58
associated companies and
joint ventures, EUR million
Depreciation, -101
amortisation and
impairment charges,
EUR million
Operating profit, 145
EUR million
% of sales 17.9
Special items, EUR -43
million 2)
Operating profit 188
excl. special items,
EUR million
% of sales 23.3
Pulp deliveries, 1,927
1,000 t
Capital employed 1,423
(average), EUR million
ROCE (excl. special 13.2
items), %
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint venture, and special
items.
2) In 2008, special items of EUR 59 million relate to the closure of the
Tervasaari pulp mill. Special items in 2007 comprise of a goodwill impairment
charge of EUR 43 million.
Q4 of 2008 compared with Q4 of 2007
The operating profit excluding special items for Pulp declined to a loss of EUR
17 million (profit of EUR 9 million). Sales totalled EUR 200 million (187
million). Pulp deliveries from UPM's own pulp mills declined 6% to 421,000
tonnes (446,000).
Profitability weakened from the previous year, mainly due to persistently high
wood costs. Also the significant production downtime during the period had a
negative impact on the results. All of UPM's pulp mills were shut down for at
least a week in December.
The share of the results of the associated company Metsä-Botnia was EUR -4
million (6 million).
2008 compared with 2007
The operating profit excluding special items for Pulp declined to EUR 148
million (188 million). Sales totalled EUR 944 million (808 million). Pulp
deliveries from UPM's own pulp mills increased by 3% to 1,982,000 tonnes
(1,927,000).
Profitability decreased from the year 2007, mainly due to higher wood costs.
The share of the results of the associated company Metsä-Botnia was EUR 86
million (58 million). The improvement came from Metsä-Botnia's new pulp mill in
Uruguay, started up in November 2007, which more than compensated for the
weakened profitability in Metsä-Botnia's Finnish operations.
In December UPM closed down the Tervasaari pulp mill (annual capacity 210,000
tonnes of pulp). As special items UPM booked charges of EUR 59 million
consisting of impairment charges of EUR 51 million and other costs of EUR 8
million related to the closure of the mill.
Market review
In the first half of 2008, chemical market pulp demand and prices increased
from the previous year. Global chemical pulp market prices peaked during the
second quarter in USD and in October in euro terms. Since then market pulp
prices have fallen very rapidly as the weakening global economy led to
decreasing pulp demand and growing pulp producer inventories.
The average softwood pulp (NBSK) market price in euro terms in 2008 was
practically unchanged from 2007, at EUR 579/tonne. However, at the end of the
year, the NBSK price had fallen to EUR 458/tonne, which is 21% below the year's
average price during the year. The average hardwood pulp (BHKP) market price in
euro terms, at EUR 536/ton, increased some 4% from 2007 (e 513/ton). However,
at the end of the year the price stood at EUR 417/ton, 22% below the average
price level.
Forest and timber
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q4/
08 08 08 08 07 07 07 07 08
Sales, EUR million 419 475 518 508 537 490 514 498 1,920
EBITDA, EUR million 1) -52 -4 4 4 33 22 53 51 -48
% of sales -12.4 -0.8 0.8 0.8 6.1 4.5 10.3 10.2 -2.5
Change in fair -2 4 20 28 47 21 14 -3 50
value of biological assets
and wood harvested, EUR million
Share of results of -1 - - 1 - - 1 - -
associated companies
and joint ventures, EUR million
Depreciation, -6 -36 -7 -7 -26 -5 -7 -6 -56
amortisation and
impairment charges, EUR million
Operating profit, -63 -38 17 25 60 38 61 42 -59
EUR million
% of sales -15.0 -8.0 3.3 4.9 11.2 7.8 11.9 8.4 -3.1
Special items, EUR -2 -33 - -1 -13 - - - -36
million 2)
Operating profit -61 -5 17 26 73 38 61 42 -23
excl. special items, EUR million
% of sales -14.6 -1.1 3.3 5.1 13.6 7.8 11.9 8.4 -1.2
Sawn timber 421 510 628 573 537 505 666 617 2,132
deliveries, 1,000 m3
Capital employed 1,878
(average), EUR million
ROCE (excl. special -1.2
items), %
Q1-Q4/
07
Sales, EUR million 2,039
EBITDA, EUR million 1) 159
% of sales 7.8
Change in fair 79
value of biological assets
and wood harvested,
EUR million
Share of results of 1
associated companies
and joint ventures,
EUR million
Depreciation, -44
amortisation and
impairment charges,
EUR million
Operating profit, 201
EUR million
% of sales 9.9
Special items, EUR -13
million 2)
Operating profit 214
excl. special
items, EUR million
% of sales 10.5
Sawn timber 2,325
deliveries, 1,000 m3
Capital employed 1,679
(average), EUR million
ROCE (excl. special 12.7
items), %
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint venture, and special
items.
2) Special items in 2008 include an impairment charge of EUR 31 million related
to fixed assets of the Finnish sawmills. In 2007, special items include
impairment charges of EUR 19 million related mainly to Miramichi's forestry and
sawmilling operations and a gain of EUR 6 million on sale of estate assets.
Q4 of 2008 compared with Q4 of 2007
The operating profit excluding special items for Forest and timber fell to a
loss of EUR 61 million (profit of EUR 73 million). Sales declined 22% to EUR
419 million (537 million). Sawn timber deliveries decreased by 22% to 421,000
cubic metres (537,000 cubic metres).
Profitability contracted from the same period last year, mainly due to sharply
lower prices of sawn timber and a write down of EUR 36 million in wood
inventory. The average price of sawn timber declined approximately 22% from the
same period last year.
The increase in the fair value of biological assets (growing trees) was EUR 12
million (74 million). The cost of wood raw material harvested from the Group's
own forests was EUR 14 million (27 million). The net effect was EUR 2 million
negative (47 million positive).
2008 compared with 2007
The operating profit excluding special items for Forest and timber declined to
a loss of EUR 23 million (profit of EUR 214 million). Sales decreased by 6% to
EUR 1,920 million (2,039 million). Sawn timber deliveries contracted 8% to
2,132,000 cubic metres (2,325,000 cubic metres).
Profitability declined from the same period last year, mainly due to
significantly lower prices of sawn timber and higher cost of wood, including a
write down of EUR 36 million in wood inventory booked at the end of the year.
The average price of sawn timber fell approximately 17% from the previous year.
The increase in the fair value of biological assets net of wood harvested was
EUR 50 million (79 million), including the increase of EUR 138 million (195
million) in the value of growing trees and the cost of EUR 88 million (116
million) for wood harvested from own forests.
In June UPM closed down the Luumäki timber components and planing mill.
In December UPM closed down the Leivonmäki sawmill (annual capacity 80,000
cubic metres of sawn timber).
Special items of EUR 36 million in 2008 include impairment charges of EUR 31
million related to the Finnish sawmilling operations recognised in September,
and other restructuring costs of EUR 5 million. The primary reasons for the
impairment were the increased cost of wood raw material, weakened demand for
sawn goods in the main markets and lower sales prices.
Market review
The market balance of sawn timber continued to weaken substantially throughout
the year. Demand for both redwood and whitewood timber declined, partly due to
the weakening situation in the construction industry. The sawn timber supply in
Europe remained high, leading to a significant reduction in price. The decline
in sawn timber demand and prices was further intensified towards the end of the
year.
In Finland fibre wood market prices remained at the high level that was reached
in 2007 and only started declining during the fourth quarter as wood demand
slowed down. Log market prices decreased from the previous year but at a slower
pace than sawn timber prices.
Wood purchases in the Finnish wood market were some 25% lower than in 2007. The
mild winter and the anticipated prohibitive Russian wood export duties
contributed to the slow market activity and persistently high prices.
In Russia the authorities continued to implement the increase in export duties
for round wood by raising the tariff from EUR 10 to EUR 15 per cubic metre in
April. According to the original plan, the tariff was to be raised to EUR 50
per cubic metre from the beginning of 2009. However, in November 2008 it was
announced that the tariff increase has been postponed until October-December
2009.
Paper
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
08 08 08 08 07 07 07 07
Sales, EUR million 1,750 1,761 1,727 1,773 1,864 1,856 1,815 1,793
EBITDA, EUR million 1) 189 271 216 209 221 240 248 230
% of sales 10.8 15.4 12.5 11.8 11.9 12.9 13.7 12.8
Share of results of 1 - - - - - - -
associated companies
and joint ventures, EUR million
Depreciation, -264 -388 -156 -159 -169 -167 -487 -172
amortisation and
impairment charges,
EUR million
Operating profit, -126 -114 60 51 -19 73 -249 58
EUR million
% of sales -7.2 -6.5 3.5 2.9 -1.0 3.9 -13.7 3.2
Special items, EUR -153 -227 - 1 -71 - -328 -
million 2)
Operating profit 27 113 60 50 52 73 79 58
excl. special items,
EUR million
% of sales 1.5 6.4 3.5 2.8 2.8 3.9 4.4 3.2
Deliveries, 1,809 1,760 1,749 1,772 1,940 1,933 1,872 1,785
publication
papers, 1,000 t
Deliveries, fine 784 863 923 981 977 954 960 968
and speciality
papers, 1,000 t
Paper deliveries 2,593 2,623 2,672 2,753 2,917 2,887 2,832 2,753
total, 1,000 t
Q1-Q4/ Q1-Q4/
08 07
Sales, EUR million 7,011 7,328
EBITDA, EUR million 1) 885 939
% of sales 12.6 12.8
Share of results of 1 -
associated companies
and joint ventures, EUR million
Depreciation, -967 -995
amortisation and
impairment charges,
EUR million
Operating profit, -129 -137
EUR million
% of sales -1.8 -1.9
Special items, EUR -379 -399
million 2)
Operating profit 250 262
excl. special items,
EUR million
% of sales 3.6 3.6
Deliveries, 7,090 7,530
publication
papers, 1,000 t
Deliveries, fine 3,551 3,859
and speciality
papers, 1,000 t
Paper deliveries 10,641 11,389
total, 1,000 t
Capital employed 6,503 7,317
(average), EUR million
ROCE (excl. special 3.8 3.6
items), %
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint venture, and special
items.
2) In 2008, special items include the goodwill impairment charge of EUR 230
million impairment charges of EUR 101 million and other restructuring costs of
EUR 42 million related to the closure of the Kajaani paper mill, and other
restructuring costs, net of EUR 6 million. Special items in 2007 include
personnel expenses of EUR 44 million and other costs of EUR 36 million related
to
the closure of the Miramichi paper mill, and an income of EUR 8 million related
to other restructuring measures. Special items also include a goodwill
impairment charge of EUR 307 million, an impairment charge of EUR 22 million
and
personnel costs of EUR 10 million related to the Miramichi paper mill, and
income
of EUR 11 million related to impairment reversals.
Q4 of 2008 compared with Q4 of 2007
The operating profit excluding special items for Paper was EUR 27 million, EUR
25 million lower than a year ago (52 million). Sales were EUR 1,750 million
(1,864 million). Paper deliveries decreased by 11% to 2,593,000 tonnes
(2,917,000). Paper deliveries for publication papers (magazine papers and
newsprint) decreased by 7% and for fine and speciality papers by 20% from the
previous year.
Profitability weakened compared with the corresponding period last year. The
average price for all paper deliveries when translated into euros was 6%
higher, although GBP was about 19% weaker against euro. The average paper price
increased mainly due to the higher magazine paper prices. In response to the
weakening market situation, extensive production downtime was taken during the
quarter. The production cuts decreased the cost efficiency of the production.
Energy costs were higher than a year ago. Paper inventory levels were reduced
significantly during the quarter.
2008 compared with 2007
The operating profit excluding special items for Paper was EUR 250 million, EUR
12 million lower than in the previous year (262 million). Sales decreased to
EUR 7,011 million (7,328 million).
Paper deliveries decreased by almost 7% to 10,641,000 tonnes (11,389,000).
Deliveries of publication papers (magazine papers and newsprint) decreased by
6% and those of fine and speciality papers by 8% from the previous year. At the
end of the period, paper inventory levels were approximately 200,000 tonnes
lower than in 2007.
Profitability decreased from the previous year, due to the markedly higher
energy and fibre costs. Higher paper prices offset most of the negative impact
of lower delivery volumes. The stronger euro against both GBP and USD weakened
the profitability of exports. When translated into euros, the average price for
all paper deliveries was over 2% higher than a year ago. The fixed costs were
lower than in 2007.
The production of the Miramichi paper mill in Canada was stopped in August
2007. During 2008, Kajaani mill PM4 in Finland was temporarily idled from
March, and at Nordland fine paper mill PM2 in Germany production was
temporarily shut down since early summer until the end of the year. In France,
Docelles mill, there was one month production curtailment in August. In China,
the Changshu fine paper mill took considerable production downtime during the
fourth quarter to meet an abrupt decline in market demand.
The Kajaani paper mill in Finland, with a capacity of 640,000 t/a of newsprint,
special newsprint and uncoated magazine papers, was shut down permanently in
December 2008. UPM booked as a special item an approximately EUR 101 million
write-off in fixed assets and made a provision for the layoff and other closure
costs of approximately EUR 42 million with a cash impact mainly in 2009.
Additionally, Paper recorded a EUR 230 million impairment charge from the
business area's goodwill. The impairment resulted from lower-than-forecast
newsprint market demand in Europe and continued overcapacity in Europe combined
with increased costs.
Market review
Demand for publication papers in Europe was 2% lower than a year ago and for
fine papers demand decreased by 3%. In North America, the demand for
publication papers continued to decline and demand was 10% down from last year.
In Asia demand for fine papers continued to grow although at a slower pace than
last year.
In Europe the average market prices for magazine papers in local currencies
increased by about 5% from 2007. The standard newsprint market prices were 8%
lower. The average market price for coated fine papers decreased by 3% and for
uncoated fine papers by 2% from the previous year. In North America the average
US dollar prices for magazine papers were 20% higher. In Asia market prices for
fine papers increased.
Label
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q4/
08 08 08 08 07 07 07 07 08
Sales, EUR million 233 239 245 242 242 245 255 256 959
EBITDA, EUR million 1) -1 9 15 11 16 19 23 27 34
% of sales -0,4 3.8 6.1 4.5 6.6 7.8 9.0 10.5 3.5
Depreciation, -16 -8 -7 -8 -8 -7 -7 -7 -39
amortisation and
impairment charges,EUR million
Operating profit, -38 1 8 3 12 12 16 20 -26
EUR million
% of sales -16,3 0.4 3.3 1.2 5.0 4.9 6.3 7.8 -2.7
Special items, EUR -28 - - - 4 - - - -28
million 2)
Operating profit -10 1 8 3 8 12 16 20 2
excl. special
items, EUR million
% of sales -4.3 0.4 3.3 1.2 3.3 4.9 6.3 7.8 0.2
Capital employed 510
(average), EUR million
ROCE (excl. special 0.4
items), %
Q1-Q4/
07
Sales, EUR million 998
EBITDA, EUR million 1) 85
% of sales 8.5
Depreciation, -29
amortisation and
impairment charges, EUR million
Operating profit, 60
EUR million
% of sales 6.0
Special items, EUR 4
million 2)
Operating profit 56
excl. special
items, EUR million
% of sales 5.6
Capital employed 420
(average), EUR million
ROCE (excl. special 13.3
items), %
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint venture, and special
items.
2) In 2008, special items of EUR 28 million relate to measures to reduce
coating
capacity and close two slitting terminals in Europe. Special items in 2007
include an income of EUR 4 million related to restructuring measures.
Q4 of 2008 compared with Q4 of 2007
The operating loss excluding special items for Label was EUR 10 million (profit
of EUR 8 million). Sales were EUR 233 million (242 million).
The profitability of the business was clearly lower than in 2007. Material
costs were higher and delivery volumes fell. Also depreciation of GBP had a
negative effect on profitability. Prices increased from 2007.
Delivery volumes of self-adhesive label materials declined in both Europe and
North America. In Asia, volumes increased even if the growth rate was much
slower than a year before.
2008 compared with 2007
The operating profit of Label excluding special items declined to EUR 2 million
from EUR 56 million. Sales were EUR 959 million, about 4% less than in the
previous year (998 million).
Profitability declined as material costs increased. Also the increase in fixed
costs related to two new factories and decline in sales volume had a negative
effect on profitability. Sales prices continued to contract until the first
quarter of 2008. The price increases initiated since the first quarter improved
prices and the average price of sales when translated into euro was about the
same as the year before.
UPM Raflatac opened two new pressure sensitive label factories. In January a
factory in Dixon, USA, was opened and in November a factory in Wroclaw, Poland,
was started up.
As market demand for self-adhesive labelstock began to decline, in November UPM
announced a plan to reduce coating capacity and to close two slitting terminals
in Europe. The aim is to secure the cost competitiveness of Label in all
circumstances. UPM booked charges of EUR 28 million as special items related to
the above measures.
Market review
In Europe, demand remained stable until summer but since then has contracted
especially during the fourth quarter, reflecting a decline in consumer goods
demand and customers' drive for inventory reductions. For the year the demand
declined approximately 3% from last year both in Europe and North America. In
the Asia-Pacific region, demand continued to grow but even there the pace of
growth slowed in the autumn.
Plywood
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/Q1-Q4/
08 08 08 08 07 07 07 07 08
Sales, EUR million 102 121 150 157 154 126 150 161 530
EBITDA, EUR million 1) -5 3 22 26 20 8 20 23 46
% of sales -4.9 2.5 14.7 16.6 13.0 6.3 13.3 14.3 8.7
Depreciation, -5 -5 -6 -5 -5 -5 -5 -6 -21
amortisation and
impairment charges, EUR million
Operating profit, -10 -2 19 21 15 3 15 17 28
EUR million
% of sales -9.8 -1.7 12.7 13.4 9.7 2.4 10.0 10.6 5.3
Special items, EUR - - 3 - - - - - 3
million 2)
Operating profit -10 -2 16 21 15 3 15 17 25
excl. special items,
EUR million
% of sales -9.8 -1.7 10.7 13.4 9.7 2.4 10.0 10.6 4.7
Deliveries, 160 188 227 231 239 204 247 255 806
plywood, 1,000 m3
Capital employed 307
(average), EUR million
ROCE (excl. special 8.1
items), %
Q1-Q4/
07
Sales, EUR million 591
EBITDA, EUR million 1) 71
% of sales 12.0
Depreciation, -21
amortisation and
impairment charges, EUR million
Operating profit, 50
EUR million
% of sales 8.5
Special items, EUR -
million 2)
Operating profit 50
excl. special items,
EUR million
% of sales 8.5
Deliveries, 945
plywood, 1,000 m3
Capital employed 300
(average), EUR million
ROCE (excl. special 16.7
items), %
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint venture, and special
items.
2) Special items in 2008 include reversals of provisions related to the
disposed Kuopio plywood mill.
Q4 of 2008 compared with Q4 of 2007
The operating loss excluding special items for Plywood was EUR 10 million
(profit of EUR 15 million). Sales decreased by EUR 52 million to EUR 102
million as Plywood deliveries declined by 79,000 m3 to 160,000 m3.
Profitability for Plywood declined from last year due to lower delivery volumes
and lower prices. The cost of wood logs was higher than in 2007. The rapid
decline in new orders led to reduction of production at all mills.
2008 compared with 2007
The operating profit excluding special items for Plywood was EUR 25 million,
EUR 25 million less than in 2007 (50 million). Sales were EUR 530 million (591
million). Plywood deliveries were 806,000 m3 (945,000).
Profitability for Plywood declined during the second half of the year due to
lower deliveries. The cost of wood logs increased from 2007. The average
price for all plywood deliveries was higher than in 2007 although prices
started to decline in the latter part of the year. The availability of logs
improved and returned to normal. In the second half of the year the decline in
new orders resulted in reduction in production at all mills, and UPM decided to
temporarily shut down the Heinola mill from 19 January 2009 onwards.
Market review
In 2008, plywood demand was still brisk in the first half of the year but it
has declined since then due to sharply falling construction activity in Europe.
Transport and other industrial uses of plywood have followed the same cycle.
Declining demand in Europe has left much idle capacity and led to reduction of
inventory levels in all parts of the chain.
Other operations
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
08 08 08 08 07 07 07 07
Sales, EUR million 34 52 66 48 80 83 160 127
EBITDA, EUR million 1) -38 3 -13 -9 -1 3 -10 -6
% of sales -111.8 5.8 -19.7 -18.8 -1.3 3.6 -6.3 -4.7
Share of results of -1 -1 3 - - 1 1 -1
associated companies
and joint ventures,
EUR million
Depreciation, 2 -2 -5 -3 -11 -8 -2 -7
amortisation and
impairment charges,
EUR million
Operating profit, -35 4 -16 -7 27 -4 60 -14
EUR million
% of sales -102.9 7.7 -24.2 -14.6 33.8 -4.8 37.5 -11.0
Special items, EUR 2 4 -1 5 28 - 71 -
million 2)
Operating profit -37 0 -15 -12 -1 -4 -11 -14
excl. special items,
EUR million
% of sales -108.8 0.0 -22.7 -25.0 -1.3 -4.8 -6.9 -11.0
Q1-Q4/Q1-Q4/
08 07
Sales, EUR million 200 450
EBITDA, EUR million 1) -57 -14
% of sales -28.5 -3.1
Share of results of 1 1
associated companies
and joint ventures,
EUR million
Depreciation, -8 -28
amortisation and
impairment charges,
EUR million
Operating profit, -54 69
EUR million
% of sales -27.0 15.3
Special items, EUR 10 99
million 2)
Operating profit -64 -30
excl. special
items, EUR million
% of sales -32.0 -6.7
Capital employed 137 217
(average), EUR million
ROCE (excl. special -46.7 -13.8
items), %
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint venture, and special
items.
2) In 2008, special items include an adjustment of EUR 5 million to sales of
disposals of 2007 and other restructuring income net of EUR 5 million. In 2007
special items include a capital gain of EUR 58 million on the sale of port
operators Rauma Stevedoring and Botnia Shipping, a compensation charge of
EUR 12
million related to class-action lawsuits in the US, and other impairment
charges and restructuring costs of EUR 18 million. In addition, special items
include capital gains of EUR 42 million related to the sale of UPM-Asunnot and
EUR 29 million related to the sale of Walki Wisa.
Other operations include development units (the wood plastic composite unit
ProFi, RFID tags, and biofuels) and corporate administration.
Q4 of 2008 compared with Q4 of 2007
Excluding special items, the operating loss for Other operations was EUR 37
million (loss of EUR 1 million). Sales amounted to EUR 34 million (80 million).
The result was unfavourably impacted by currency and other derivatives.
The development units incurred an operating loss. RFID and UPM ProFi expanded
their production during the quarter.
2008 compared with 2007
Excluding special items, the operating loss of Other operations was EUR 64
million (loss of EUR 30 million). Sales were EUR 200 million (450 million).
Operating profit and sales were affected by the following disposals made in
2007: the real estate company UPM-Asunnot Oy in April and Walki Wisa in June
and port operators Oy Rauma Stevedoring Ltd and Oy Botnia Shipping Ab in
October.
Logistic services represented about half of the sales, of which a major part
was internal. Development units made an operating loss. Development units
continued to invest in product development. During the year UPM established a
new UPM Biorefinery Development Centre for the research of biofuels and
biochemicals in Lappeenranta, Finland, and opened a new state-of-the-art RFID
manufacturing site in Guangzhou, China, and a new wood composite UPM ProFi
factory in Bruchsal, Germany.
Helsinki, 5 February 2009
UPM-Kymmene Corporation
Board of Directors
Financial information
This Financial Review is unaudited
Consolidated income statement
EUR million Q4/ Q4/ Q1-Q4/ Q1-Q4/
2008 2007 2008 2007
Sales 2,315 2,512 9,461 10,035
Other operating 9 87 83 200
income
Costs and expenses -2,227 -2,270 -8,407 -8,650
Change in fair -2 47 50 79
value of biological
assets and wood harvested
Share of results of -16 2 62 43
associated
companies and joint ventures
Depreciation, -365 -236 -1,225 -1,224
amortisation and
impairment charges
Operating profit -286 142 24 483
(loss)
Gains on - - 2 2
available-for-sale
investments, net
Exchange rate and -14 -4 -25 -2
fair value gains
and losses
Interest and other -60 -46 -202 -191
finance costs, net
Profit (loss) -360 92 -201 292
before tax
Income taxes 74 -63 21 -211
Profit (loss) for -286 29 -180 81
the period
Attributable to:
Equity holders of -287 32 -179 85
the parent company
Minority interest 1 -3 -1 -4
-286 29 -180 81
Earnings per share for profit (loss)
attributable to the equity holders of
the parent company
Basic earnings per -0.56 0.06 -0.35 0.16
share, EUR
Diluted earnings -0.56 0.06 -0.35 0.16
per share, EUR
Consolidated balance sheet
EUR million 31.12.2008 31.12.2007
ASSETS
Non-current assets
Goodwill 933 1,163
Other intangible assets 403 392
Property, plant and equipment 5,688 6,179
Investment property 19 14
Biological assets 1,133 1,095
Investments in associated 1,263 1,193
companies and joint ventures
Available-for-sale investments 116 116
Non-current financial assets 361 82
Deferred tax assets 258 284
Other non-current assets 201 121
10,375 10,639
Current assets
Inventories 1,354 1,342
Trade and other receivables 1,686 1,717
Income tax receivables 24 18
Cash and cash equivalents 330 237
3,394 3,314
Assets classified as held for sale 12 -
Total assets 13,781 13,953
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent company
Share capital 890 890
Translation differences -295 -158
Fair value and other reserves 130 193
Reserve for invested 1,145 1,067
non-restricted equity
Retained earnings 4,236 4,778
6,106 6,770
Minority interest 14 13
Total equity 6,120 6,783
Non-current liabilities
Deferred tax liabilities 658 745
Retirement benefit obligations 408 441
Provisions 191 171
Interest-bearing liabilities 4,534 3,384
Other liabilities 25 12
5,816 4,753
Current liabilities
Current interest-bearing 537 931
liabilities
Trade and other payables 1,258 1,443
Income tax payables 33 43
1,828 2,417
Liabilities related to assets 17 -
classified as held for sale
Total liabilities 7,661 7,170
Total equity and liabilities 13,781 13,953
Consolidated statement of changes in equity
Attributable to equity holders of the parent company
Share Share Treasury Translation Fair
EUR million capital premium shares differences value and
reserve other
reserves
Balance at 1 January 2007 890 826 - -89 278
Translation differences - - - -69 -
Net investment hedge, - - - - -
net of tax
Cash flow hedges
fair value - - - - 68
gains/losses, net of tax
transfers from - - - - -41
equity, net of tax
Available-for-sale investments
fair value - - - - -
gains/losses, net
of tax
transfers to income - - - - -1
statement, net of tax
Profit for the period - - - - -
Total recognised income - - - -69 26
and expense for the period
Share options exercised - - - - -
Acquisition of - - -266 - -
treasury shares
Cancellation of - - 266 - -
treasury shares
Share-based - - - - 13
compensation, net of tax
Dividend paid - - - - -
Business combinations - - - - -
Transfers and others - -826 - - -124
Total of other - -826 - - -111
changes in equity
Balance at 31 December 2007 890 - - -158 193
Translation differences - - - -193 -
Other items - - - - -
Net investment hedge, - - - 56 -
net of tax
Cash flow hedges
fair value - - - - 29
gains/losses, net of tax
transfers from - - - - -62
equity, net of tax
Available-for-sale investments
fair value - - - - -
gains/losses, net of tax
transfers to income - - - - -
statement, net of tax
Loss for the period - - - - -
Total recognised - - - -137 -33
income and expense for the period
Share options exercised - - - - -
Acquisition of - - - - -
treasury shares
Cancellation of - - - - -
treasury shares
Share-based - - - - -29
compensation, net of tax
Dividend paid - - - - -
Business combinations - - - - -
Other items - - - - -1
Total of other - - - - -30
changes in equity
Balance at 31 December 2008 890 - - -295 130
Reserve for Retained Total Minority Total
invested earnings interest equity
non-restricted
EUR million equity
Balance at 1 January 2007 - 5,366 7,271 18 7,289
Translation differences - - -69 - -69
Net investment hedge, - - - - -
net of tax
Cash flow hedges
fair value - - 68 - 68
gains/losses, net of tax
transfers from - - -41 - -41
equity, net of tax
Available-for-sale investments
fair value - - - - -
gains/losses, net of tax
transfers to income - - -1 - -1
statement, net of tax
Profit for the period - 85 85 -4 81
Total recognised - 85 42 -4 38
income and expense for the period
Share options exercised 104 - 104 - 104
Acquisition of - - -266 - -266
treasury shares
Cancellation of - -266 - - -
treasury shares
Share-based - - 13 - 13
compensation, net of tax
Dividend paid - -392 -392 - -392
Business combinations - - - -1 -1
Transfers and others 963 -15 -2 - -2
Total of other 1,067 -673 -543 -1 -544
changes in equity
Balance at 1,067 4,778 6,770 13 6,783
31 December 2007
Translation differences - - -193 - -193
Other items - -12 -12 - -12
Net investment hedge, - - 56 - 56
net of tax
Cash flow hedges
fair value - - 29 - 29
gains/losses, net of tax
transfers from - - -62 - -62
equity, net of tax
Available-for-sale investments
fair value - - - - -
gains/losses, net of tax
transfers to income - - - - -
statement, net of tax
Loss for the period - -179 -179 -1 -180
Total recognised - -191 -361 -1 -362
income and expense for the period
Share options exercised 78 - 78 - 78
Acquisition of - - - - -
treasury shares
Cancellation of - - - - -
treasury shares
Share-based - 33 4 - 4
compensation, net of tax
Dividend paid - -384 -384 - -384
Business combinations - - - 2 2
Other items - - -1 - -1
Total of other 78 -351 -303 2 -301
changes in equity
Balance at 31 1,145 4,236 6,106 14 6,120
December 2008
Consolidated cash flow statement
Year ended 31 December
EUR million 2008 2007
Cash flow from operating activities
Profit (loss) for the period -180 81
Adjustments to profit (loss) 1,232 1,390
for the period 1)
Interest received 9 4
Interest paid -202 -191
Dividends received 18 23
Other financial items, net -41 -72
Income taxes paid -76 -164
Change in working capital 2) -132 -204
Net cash generated 628 867
from operating activities
Cash flow from investing activities
Acquisition of shares in -19 -25
associated companies
Capital expenditure -558 -673
Proceeds from disposal of 6 205
subsidiary shares, net of cash
Proceeds from disposal of shares 4 2
in associated companies
Proceeds from disposal of 2 3
available-for-sale investments
Proceeds from sale of tangible 33 71
and intangible assets
Proceeds from non-current receivables - 1
Increase in non-current receivables - -9
Net cash used in -532 -425
investing activities
Cash flow from financing activities
Proceeds from 1,083 965
non-current
liabilities
Payments of -624 -879
non-current
liabilities
Proceeds from -153 66
(payment of)
current
liabilities, net
Share options 78 104
exercised
Dividends paid -384 -392
Purchase of - -266
treasury shares
Other financing -1 -
cash flow
Net cash used in -1 -402
financing
activities
Change in cash and 95 40
cash equivalents
Cash and cash equivalents 237 199
at the beginning of year
Foreign exchange effect on cash -2 -2
Change in cash and cash equivalents 95 40
Cash and cash equivalents at year-end 330 237
Notes to the consolidated cash flow statement
1) Adjustments to net profit (loss)
Taxes -21 211
Depreciation, amortisation and 1,225 1,224
impairment charges
Share of results in associated -62 -43
companies and joint ventures
Profits and losses -28 -157
on sale of non-current assets
Gains on -2 -2
available-for-sale
investments, net
Finance costs, net 227 193
Settlement of restructuring charges -56 -
One-time contributions to -85 -30
pension funds
Other adjustments 34 -6
Total 1,232 1,390
2) Change in working capital
Inventories -55 -152
Current receivables 138 -129
Current non-interest bearing -215 77
liabilities
Total -132 -204
Quarterly information
EUR million Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/
08 08 08 08 07 07 07
Sales 2,315 2,358 2,378 2,410 2,512 2,467 2,537
Other operating 9 23 11 40 87 15 80
income
Costs and expenses -2,227 -1,998 -2,074 -2,108 -2,270 -2,116 -2,145
Change in fair -2 4 20 28 47 21 14
value of biological assets
and wood harvested
Share of results of -16 35 21 22 2 14 6
associated companies
and joint ventures
Depreciation, -365 -462 -199 -199 -236 -206 -567
amortisation and
impairment charges
Operating profit (loss) -286 -40 157 193 142 195 -75
Gains on - - 2 - - - -
available-for-sale
investments, net
Exchange rate and -14 - -1 -10 -4 -9 8
fair value gains and losses
Interest and other -60 -50 -43 -49 -46 -42 -54
finance costs, net
Profit (loss) -360 -90 115 134 92 144 -121
before tax
Income taxes 74 3 -25 -31 -63 -25 -77
Profit (loss) for -286 -87 90 103 29 119 -198
the period
Attributable to:
Equity holders of -287 -86 92 102 32 120 -198
the parent company
Minority interest 1 -1 -2 1 -3 -1 -
-286 -87 90 103 29 119 -198
Basic earnings per -0.56 -0.17 0.18 0.20 0.06 0.23 -0.38
share, EUR
Diluted earnings -0.56 -0.17 0.18 0.20 0.06 0.23 -0.38
per share, EUR
Earnings per share, -0.19 0.25 0.17 0.19 0.24 0.23 0.28
excluding special items, EUR
Average number of 519,979 519,999 517,622 512,581 514,085 527,012 527,111
shares basic (1,000)
Average number of 519,979 519,999 516,791 513,412 515,322 529,530 530,980
shares diluted (1,000)
Special items in -240 -256 2 5 -52 - -300
operating profit (loss)
Operating profit -46 216 155 188 194 195 225
(loss), excl. special items
% of sales -2.0 9.2 6.5 7.8 7.7 7.9 8.9
Special items -240 -250 2 5 -52 - -300
before tax
Profit (loss) -120 160 113 129 144 144 179
before tax, excl.
special items
% of sales -5.2 6.8 4.8 5.4 5.7 5.8 7.1
Return on equity, neg. 7.8 5.4 5.9 7.1 6.9 8.5
excl. special items, %
Return on capital neg. 7.7 5.7 6.5 6.9 6.8 8.3
employed, excl.
special items, %
EBITDA 178 378 313 337 351 366 411
% of sales 7.7 16.0 13.2 14.0 14.0 14.8 16.2
Share of results of associated
companies and joint ventures
Energy -11 -8 -2 -5 -4 -6 -8
Pulp -4 44 20 26 6 19 12
Forest and timber -1 - - 1 - - 1
Paper 1 - - - - - -
Other operations -1 -1 3 - - 1 1
Total -16 35 21 22 2 14 6
EUR million Q1/ Q1-Q4/ Q1-Q4/
07 08 07
Sales 2,519 9,461 10,035
Other operating 18 83 200
income
Costs and expenses -2,119 -8,407 -8,650
Change in fair -3 50 79
value of biological assets
and wood harvested
Share of results of 21 62 43
associated companies
and joint ventures
Depreciation, -215 -1,225 -1,224
amortisation and
impairment charges
Operating profit (loss) 221 24 483
Gains on 2 2 2
available-for-sale
investments, net
Exchange rate and 3 -25 -2
fair value gains and losses
Interest and other -49 -202 -191
finance costs, net
Profit (loss) before tax 177 -201 292
Income taxes -46 21 -211
Profit (loss) for 131 -180 81
the period
Attributable to:
Equity holders of 131 -179 85
the parent company
Minority interest - -1 -4
131 -180 81
Basic earnings per 0.25 -0.35 0.16
share, EUR
Diluted earnings 0.25 -0.35 0.16
per share, EUR
Earnings per share, 0.25 0.42 1.00
excluding special items, EUR
Average number of 523,261 517,545 522,867
shares basic (1,000)
Average number of 527,086 517,545 525,729
shares diluted (1,000)
Special items in - -489 -352
operating profit (loss)
Operating profit (loss), 221 513 835
excl. special items
% of sales 8.8 5.4 8.3
Special items - -483 -352
before tax
Profit (loss) 177 282 644
before tax, excl. special items
% of sales 7.0 3.0 6.4
Return on equity, 7.3 3.4 7.4
excl. special items, %
Return on capital 7.9 4.6 7.4
employed, excl. special items, %
EBITDA 418 1,206 1,546
% of sales 16.6 12.7 15.4
Share of results of associated
companies and joint ventures
Energy 1 -26 -17
Pulp 21 86 58
Forest and timber - - 1
Paper - 1 -
Other operations -1 1 1
Total 21 62 43
Deliveries
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
08 08 08 08 07 07 07 07
Electricity, MWh 2,731 2,653 2,344 2,439 2,716 2,576 2,415 2,642
Pulp, 1,000 t 421 480 527 554 446 492 501 488
Sawn timber, 1,000 m3 421 510 628 573 537 505 666 617
Publication papers, 1,809 1,760 1,749 1,772 1,940 1,933 1,872 1,785
1,000 t
Fine and speciality 784 863 923 981 977 954 960 968
papers, 1,000 t
Paper deliveries 2,593 2,623 2,672 2,753 2,917 2,887 2,832 2,753
total, 1,000 t
Plywood, 1,000 m3 160 188 227 231 239 204 247 255
Q1-Q4/ Q1-Q4/
08 07
Electricity, MWh 10,167 10,349
Pulp, 1,000 t 1,982 1,927
Sawn timber, 1,000 m3 2,132 2,325
Publication papers, 7,090 7,530
1,000 t
Fine and speciality 3,551 3,859
papers, 1,000 t
Paper deliveries 10,641 11,389
total, 1,000 t
Plywood, 1,000 m3 806 945
Quarterly segment information
EUR million Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
08 08 08 08 07 07 07 07
Sales by segment
Energy 141 129 103 105 112 89 81 97
Pulp 200 228 247 269 187 208 208 205
Forest and timber 419 475 518 508 537 490 514 498
Paper 1,750 1,761 1,727 1,773 1,864 1,856 1,815 1,793
Label 233 239 245 242 242 245 255 256
Plywood 102 121 150 157 154 126 150 161
Other operations 34 52 66 48 80 83 160 127
Internal sales -564 -647 -678 -692 -664 -630 -646 -618
Sales, total 2,315 2,358 2,378 2,410 2,512 2,467 2,537 2,519
Internal sales
Energy 84 84 83 90 87 79 73 81
Pulp 194 211 229 247 179 198 199 197
Forest and timber 220 278 278 275 284 248 237 249
Paper 49 62 70 69 65 59 59 64
Label - 1 1 1 - - 1 -
Plywood 8 10 11 10 11 8 9 8
Other operations 9 1 6 - 38 38 68 19
Internal sales, total 564 647 678 692 664 630 646 618
EBITDA by segment
Energy 76 58 34 39 43 24 20 31
Pulp 9 38 35 57 19 50 57 62
Forest and timber -52 -4 4 4 33 22 53 51
Paper 189 271 216 209 221 240 248 230
Label -1 9 15 11 16 19 23 27
Plywood -5 3 22 26 20 8 20 23
Other operations -38 3 -13 -9 -1 3 -10 -6
EBITDA, total 178 378 313 337 351 366 411 418
Operating profit (loss) by segment
Energy 62 49 31 33 38 17 11 29
Pulp -76 60 38 67 9 56 11 69
Forest and timber -63 -38 17 25 60 38 61 42
Paper -126 -114 60 51 -19 73 -249 58
Label -38 1 8 3 12 12 16 20
Plywood -10 -2 19 21 15 3 15 17
Other operations -35 4 -16 -7 27 -4 60 -14
Operating profit -286 -40 157 193 142 195 -75 221
(loss), total
% of sales -12.4 -1.7 6.6 8.0 5.7 7.9 -3.0 8.8
Special items by segment
Energy - - - - - - - -
Pulp -59 - - - - - -43 -
Forest and timber -2 -33 - -1 -13 - - -
Paper -153 -227 - 1 -71 - -328 -
Label -28 - - - 4 - - -
Plywood - - 3 - - - - -
Other operations 2 4 -1 5 28 - 71 -
Special items, total -240 -256 2 5 -52 - -300 -
Operating profit (loss) excl.special items by segment
Energy 62 49 31 33 38 17 11 29
Pulp -17 60 38 67 9 56 54 69
Forest and timber -61 -5 17 26 73 38 61 42
Paper 27 113 60 50 52 73 79 58
Label -10 1 8 3 8 12 16 20
Plywood -10 -2 16 21 15 3 15 17
Other operations -37 - -15 -12 -1 -4 -11 -14
Operating profit -46 216 155 188 194 195 225 221
(loss) excl.
special items, total
% of sales -2.0 9.2 6.5 7.8 7.7 7.9 8.9 8.8
EUR million Q1-Q4 /Q1-Q4 /
08 07
Sales by segment
Energy 478 379
Pulp 944 808
Forest and timber 1,920 2,039
Paper 7,011 7,328
Label 959 998
Plywood 530 591
Other operations 200 450
Internal sales -2,581 -2,558
Sales, total 9,461 10,035
Internal sales
Energy 341 320
Pulp 881 773
Forest and timber 1,051 1,018
Paper 250 247
Label 3 1
Plywood 39 36
Other operations 16 163
Internal sales, total 2,581 2,558
EBITDA by segment
Energy 207 118
Pulp 139 188
Forest and timber -48 159
Paper 885 939
Label 34 85
Plywood 46 71
Other operations -57 -14
EBITDA, total 1,206 1,546
Operating profit (loss) by segment
Energy 175 95
Pulp 89 145
Forest and timber -59 201
Paper -129 -137
Label -26 60
Plywood 28 50
Other operations -54 69
Operating profit 24 483
(loss), total
% of sales 0.3 4.8
Special items by segment
Energy - -
Pulp -59 -43
Forest and timber -36 -13
Paper -379 -399
Label -28 4
Plywood 3 -
Other operations 10 99
Special items, total -489 -352
Operating profit(loss) excl.special items by segment
Energy 175 95
Pulp 148 188
Forest and timber -23 214
Paper 250 262
Label 2 56
Plywood 25 50
Other operations -64 -30
Operating profit (loss) 513 835
excl. special items, total
% of sales 5.4 8.3
Changes in property, plant and equipment
EUR million Q1-Q4/Q1-Q4/
2008 2007
Book value at 6,179 6,500
beginning of period
Capital expenditure 471 644
Decreases -24 -96
Depreciation -748 -752
Impairment charges -182 -42
Impairment reversal - 12
Translation -8 -87
difference and other changes
Book value at end 5,688 6,179
of period
Commitments and contingencies
EUR million 31.12.2008 31.12.2007
Own commitments
Mortgages 1) 787 90
On behalf of associated
companies and joint ventures
Guarantees for loans 10 10
On behalf of others
Other guarantees 2 3
Other own commitments
Leasing commitments 17 21
for the next 12 months
Leasing commitments 56 99
for subsequent periods
Other commitments 62 70
1) The increase in mortgages relates mainly to giving mandatory security for
borrowing from Finnish pension insurance companies.
Capital commitments
EUR million Completion Total cost By Q1-Q4/ After
31.12.2007 2008 31.12.2008
Rebuild of October 2010 30 - 1 29
debarking plant, Wisaforest
Waste water September 2010 17 - - 17
treatment plant, Blandin
New Bioboiler, May 2009 75 11 48 16
Caledonian
Efficiency September 2009 9 - - 9
improvement, Chudovo
Gas usage August2009 9 - 2 7
reduction, Schwedt
Notional amounts of derivative financial instruments
EUR million 31.12.2008 31.12.2007
Currency derivatives
Forward contracts 4,598 4,369
Options, bought - 50
Options, written - 60
Swaps 508 529
Interest rate derivatives
Forward contracts 2,668 3,642
Swaps 2,833 2,383
Other derivatives
Forward contracts 172 12
Options, written 78 -
Swaps 8 3
Related party (associated companies and joint ventures) transactions and
balances
EUR million Q1-Q4/Q1-Q4/
2008 2007
Sales to associated 138 130
companies
Purchases from 592 500
associated companies
Trade and other 37 29
receivables at end of period
Trade and other 27 42
payables at end of period
Key exchange rates for the euro at end of period
31.12.2008 30.09.2008 30.06.2008 31.03.2008 31.12.2007
USD 1.3917 1.4303 1.5764 1.5812 1.4721
CAD 1.6998 1.4961 1.5942 1.6226 1.4449
JPY 126.14 150.47 166.44 157.37 164.93
GBP 0.9525 0.7903 0.7923 0.7958 0.7334
SEK 10.8700 9.7943 9.4703 9.3970 9.4415
30.09.2007 30.06.2007 31.03.2007
USD 1.4179 1.3505 1.3318
CAD 1.4122 1.4245 1.5366
JPY 163.55 166.63 157.32
GBP 0.6968 0.6740 0.6798
SEK 9.2147 9.2525 9.3462
Basis of preparation
This unaudited financial report has been prepared in accordance with the
accounting policies set out in International Accounting Standard 34 on Interim
Financial Reporting and in the Group's Consolidated Financial Statements for
2007.
The Group has adopted the following standard:
IFRS 8 Operating Segments was early adopted from 1 January 2008. IFRS 8
replaces IAS 14 Segment Reporting and aligns segment reporting with the
requirements of the US GAAP standard SFAS 131. The new standard requires the
‘management approach' to reporting on the financial performance of operating
segments. The information to be reported for each segment is to be the measure
what chief operating decision maker uses internally for evaluating segment
performance and deciding how to allocate resources to operating segments. The
adoption of IFRS 8 does not have a material impact on the Group's financial
statements, since the Group has already reported segment information in a
manner consistent with the internal reporting.
UPM's new business structure
As of 1 December 2008, UPM has been applying its new business structure. Under
the new business structure, UPM reports financial information for the following
segments: Energy, Pulp, Forest and timber, Paper, Label, Plywood and Other
operations. Comparative segment information has been revised accordingly.
Calculation of key indicators
Return on equity, %:
(Profit before tax - income taxes) / Total equity (average) x 100
Return on capital employed, %:
(Profit before tax + interest expenses and other financial expenses) / (Total
equity + interest-bearing liabilities (average)) x 100
Earnings per share:
Profit for the period attributable to equity holders of the parent company /
Adjusted average number of shares during the period excluding treasury shares
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Corporate Communications
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Main media
www.upm-kymmene.com
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 68-70 of the company's annual report 2007.
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