UPM-Kymmene
Corporation
Interim Report 26
April 2019 at 09:45 EET
UPM Interim Report Q1/2019:
UPM continues to grow sales and earnings
Q1 2019 highlights
-
Sales grew by 7% to EUR 2,693 million (2,512
million in Q1 2018).
-
Comparable EBIT increased by 5% to EUR 374
million (355 million).
-
Sales prices were higher, outweighing the impact
of increased variable costs.
-
Operating cash flow increased to EUR 320 million
(214 million).
-
Net debt decreased to EUR -5 million (41
million).
-
UPM announced a plan to close paper machine 10
at UPM Plattling, Germany.
Key figures |
Q1/2019 |
Q1/2018 |
Q4/2018 |
Q1-Q4/2018 |
Sales, EURm |
2,693 |
2,512 |
2,731 |
10,483 |
Comparable EBITDA, EURm 1) |
488 |
456 |
473 |
1,868 |
% of sales |
18.1 |
18.2 |
17.3 |
17.8 |
Operating profit, EURm |
373 |
385 |
744 |
1,895 |
Comparable EBIT, EURm |
374 |
355 |
404 |
1,513 |
% of sales |
13.9 |
14.1 |
14.8 |
14.4 |
Profit before tax, EURm |
364 |
371 |
731 |
1,839 |
Comparable profit before tax, EURm |
366 |
341 |
390 |
1,457 |
Profit for the period, EURm |
304 |
309 |
591 |
1,496 |
Comparable profit for the period, EURm |
305 |
288 |
319 |
1,194 |
Earnings per share (EPS), EUR |
0.57 |
0.58 |
1.11 |
2.80 |
Comparable EPS, EUR |
0.57 |
0.54 |
0.60 |
2.24 |
Return on equity (ROE), % |
12.3 |
14.0 |
24.9 |
16.2 |
Comparable ROE, % |
12.3 |
13.0 |
13.4 |
12.9 |
Return on capital employed (ROCE), % |
13.6 |
15.6 |
28.8 |
18.4 |
Comparable ROCE, % |
13.7 |
14.3 |
15.5 |
14.6 |
Operating cash flow, EURm 1) |
320 |
214 |
384 |
1,330 |
Operating cash flow per share, EUR 1) |
0.60 |
0.40 |
0.72 |
2.49 |
Equity per share at end of period, EUR |
18.84 |
16.83 |
18.36 |
18.36 |
Capital employed at the end of period, EURm |
11,318 |
9,733 |
10,575 |
10,575 |
Net debt at the end of period, EURm |
-5 |
41 |
-311 |
-311 |
Net debt to EBITDA (last 12 m.) |
0.00 |
0.02 |
-0.17 |
-0.17 |
Personnel at the end of period |
19,008 |
19,027 |
18,978 |
18,978 |
|
|
|
|
|
1) The 2018
comparative figures have been restated due to accounting policy
change of forest renewal costs. |
Jussi Pesonen, President and CEO,
comments on Q1 results:
"The first quarter of the year lived up to our
expectations, and we are thus able to report the 24th consecutive
quarter of increased earnings. In five of our six business areas,
prices increased more than offsetting the higher costs and keeping
overall margins healthy.
Our sales grew by 7% and comparable EBIT increased
by 5% to EUR 374 million. Operating cash flow was strong, and our
balance sheet remained debt-free even after all leases (EUR 495
million) were recognised on the balance sheet in accordance with
the new IFRS16 accounting standard.
UPM Biorefining reported another excellent
quarter. As expected, pulp prices were somewhat lower than the
historically high prices seen in the latter half of the previous
year. Pulp, Biofuels and Timber all enjoyed good customer demand
and consequently deliveries developed favourably in an
operationally successful quarter.
UPM Communication Papers had a strong quarter with
improved earnings due to year-end increases in sales prices. To
ensure our long-term success in declining markets, we continue to
implement measures to improve cost competitiveness and adapt
capacity to the profitable customer demand. The conversion of PM2
at UPM Nordland, Germany, to release liner is proceeding well and
in April we announced plans to close PM10 at UPM Plattling,
Germany.
Good demand continued in the label paper and
release liner businesses of UPM Specialty Papers. Destocking in the
Asian fine paper market appears to be over and margins are turning.
We aim to restore profitability with various cost, growth and
product development initiatives.
UPM Raflatac regained upward momentum in sales and
profitability after last year's challenge with rapid increases in
raw material costs. In January, the new product line for specialty
labels was completed in Tampere, Finland, and in March we began a
fixed-cost reduction programme to further improve earnings.
Margins remained good in UPM Plywood and market
demand in Europe was solid. The expansion project at the UPM
Chudovo plywood mill in Russia proceeded to the production trial
run phase.
UPM Energy is back on track as electricity prices
have improved. Hydropower generation is still hindered by the dry
hydrological situation.
Furthermore, we look forward to our transformative
prospects that are set to provide us with unique opportunities for
significant long-term earnings growth. In Uruguay, preparations for
the potential new world-class pulp mill are proceeding. While
encouraging progress has been made in many areas, several important
conditions stated in the Investment Agreement are still pending.
These include e.g. the execution of the Railway Contract in
relation to the Central Railway Public-Private-Partnership (PPP)
project. Labour protocols, conflict mitigation regulation and
certain material outstanding items as specified in the Investment
Agreement are all critical for UPM. If the ongoing second
preparation phase is concluded successfully, UPM will initiate the
company's regular process of analysing and preparing an investment
decision on the potential pulp mill project.
Preparations are also ongoing in our attractive
biomolecular businesses. In UPM Biochemicals, we have completed the
basic engineering of the potential biorefinery. We are currently
assessing two alternative industrial parks in Germany, in Frankfurt
and in Leuna, to select the optimal set-up for our facility. Also,
the commercial studies need to be concluded before starting UPM's
regular process of analysing and preparing an investment
decision.
UPM Biofuels is evaluating the growth opportunity
in Kotka, Finland, and new sustainable feedstocks in order to scale
up the business. The development work is expected to continue into
next year, as we aim to create a competitive next generation
biorefinery in terms of production, products and feedstocks.
UPM is in great shape and ready to grasp the
opportunities for value creation and business growth offered by
bioeconomy. We firmly believe in growing sustainable businesses
that offer solutions to global challenges such as climate change
and resource scarcity. Our innovations create value and business
opportunities for an era where the world is no longer dependent on
fossils."
Outlook 2019
The global economic growth is estimated to
continue in 2019, albeit at a slower pace than in 2018. There are,
however, significant uncertainties related to this, including trade
negotiations between China and the US, growth in China, the
undefined nature of Brexit and political uncertainties in several
countries. These issues may have an impact on the global economic
growth and on UPM's product and raw material markets during
2019.
UPM reached record earnings in 2018. UPM's
business performance is expected to continue at a good level in
2019.
In 2019, favourable demand is expected to continue
for most UPM businesses. Demand decline is expected to continue for
UPM Communication Papers.
In the early part of the year 2019, pulp prices
are expected to be lower and graphic paper prices in Europe higher
than in Q4 2018. Input costs are expected to stabilise after
the significant increases seen in 2018. UPM will continue measures
to reduce both variable and fixed costs.
Fair value increases of forest assets are not
expected to contribute materially to comparable EBIT in 2019.
Webcast and press
conference
UPM's President and CEO Jussi Pesonen will present
the financial results in a webcast and a conference call for
analysts and investors, held in English language, today at 13:15
EET.
Later in the afternoon, Jussi Pesonen will present
the results in a press conference held in Finnish language at the
UPM Group Head Office (The Biofore House) in Helsinki, Alvar Aallon
katu 1, at 14:30 EET.
Webcast and 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. We recommend that participants start
dialling in 5-10 minutes prior to ensure a timely start of the
webcast.
The presentation is available at www.upm.com for
12 months after the call.
Conference call title: UPM
Interim Report for January - March 2019
International telephone numbers
with a pin code 90517318#
Australia Toll: +61 284 058 549
Austria Toll: +43 192 879 07
Belgium Toll: +32 240 358 14
Denmark Toll: +45 354 455 77
Finland Toll: +358 981 710 310
France Toll: +33 170 750 711
Germany Toll: +49 691 380 34 30
Hong Kong Toll: +852 306 002 25
Italy Toll: +39 023 601 38 21
India Toll: +91 226 187 51 72
Japan Toll: +81 344 556 492
Netherlands Toll: +31 207 095 189
Norway Toll: +47 235 002 43
Singapore Toll: +65 642 983 49
Spain Toll: +34 935 472 900
Sweden Toll: +46 856 642 651
Switzerland Toll: +41 225 809 034
United Kingdom Toll: +44 333 300 08 04
United States Toll: +1 631 913 14 22
**
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. The main earnings
sensitivities and the group's cost structure are presented on pages
135-136 of the 2018 Annual Report. Risks and opportunities are
discussed on pages 30-31 and risks and risk management are
presented on pages 106-109 of the report.
**
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations
UPM, Media
Relations
Mon-Fri 9:00-16:00 EET
tel. +358 40 588 3284
media@upm.com
UPM
We deliver renewable and responsible solutions and innovate for a
future beyond fossils across six business areas: UPM Biorefining,
UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication
Papers and UPM Plywood. We employ around 19,000 people worldwide
and our annual sales are approximately EUR 10.5 billion. Our shares
are listed on Nasdaq Helsinki Ltd. UPM Biofore - Beyond fossils.
www.upm.com
Follow UPM on Twitter | LinkedIn | Facebook |
YouTube | Instagram | #UPM #biofore #beyondfossils
UPM_interim_release_Q1_19_sec
This
announcement is distributed by West Corporation on behalf of West
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The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: UPM via Globenewswire
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