UPM decreased EBITDA margin to 14.2% in 2Q2017

UPM slightly decreased profitability amid stable sales in 2Q2017. According to the disclosed information, the company’s sales in the period totaled EUR 2,464 million, generating EUR 349 million of comparable EBITDA (14.2% margin). The indicators are respectively equivalent and 9.4% lower than in the same quarter the last year.

Jussi Pesonen, UPM’s President and CEO, commented:

“UPM’s comparable EBIT continued on an increasing track in Q2 despite clearly higher maintenance activity during the quarter. Operating cash flow was solid at EUR 269 million and net debt decreased to EUR 1,046 million.

Market demand was good and delivery growth continued in most businesses during the quarter. As expected, the higher maintenance activity resulted in temporarily higher fixed costs and lower operational efficiency. Moderate cost inflation continued but was mitigated by our own cost reduction measures and targeted price increases. Overall business conditions were favourable resulting in good performance.

UPM Biorefining benefitted from higher pulp prices, strong pulp demand and improved operational performance in UPM Biofuels. Profitability improved despite the maintenance shutdown at the UPM Pietarsaari pulp mill. UPM Raflatac and UPM Plywood maintained strong profitability and continued to show solid sales growth. UPM Specialty Papers achieved an excellent result. Thanks to the new specialty paper machine at UPM Changshu we have been able to grow the release liner business and improve our product mix even faster than expected.

UPM Paper ENA achieved a satisfactory result in the quarter most impacted by seasonal factors. Demand decline in Europe remained moderate. UPM Energy suffered from poor hydrological availability and prolonged maintenance activity at Olkiluoto power plant in Finland. As a result, power generation was exceptionally low during the quarter.

The focused growth projects over the recent years have been highly successful and have contributed to our profits and returns well. During the second quarter we introduced two further focused investments: the Kaukas pulp mill efficiency and competitiveness improvement in Lappeenranta and the UPM Raflatac specialty labels expansion in Tampere, both of which are in Finland.

When it comes to longer-term growth, the discussions continue with the Government of Uruguay concerning infrastructure development and other local prerequisites for a potential pulp mill investment.

2017 has started well for us. Five out of our six businesses improved their performance during the first half of the year. Our businesses are performing well, and our cash flow and balance sheet enable us to distribute attractive dividend and simultaneously invest in profitable growth. We look confidently into the future and our opportunities for creating value from bioeconomy.”

In 1Q2017 UPM increased EBITDA margin to 16.3%.

Check other wood business-related companies 2Q2017 schedules for financial and operating results.

Earlier UPM completed sale of its hydro power facilities in Austria.

About UPM:

The company is largely focused on fibre- and biomass-based businesses, recyclable raw materials and products. UPM integrates bio and forest industries and operates across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Paper Asia, UPM Paper ENA (Europe and North America) and UPM Plywood.

Source: Woodbizforum