UPMCommunication Papers

Interim Report Q2/2015: UPM's good progress continued in Q2, with higher profits year-on-year

Press Release 28.7.2015 10:00 EEST
UPM-Kymmene Corporation   Interim Report   28 July 2015 at 9:15 EET 
Q2 2015 compared with Q2 2014
• Earnings per share excluding special items were EUR 0.33 (0.26), and reported EUR 0.30 (0.25)
• Operating profit excluding special items increased to EUR 227 million, 8.9% of sales (186 million, 7.6% of sales)
• Profitability was underpinned by profit improvement actions and favourable exchange rates
• In Q2 2015, the profit improvement programme progressed well, reaching a cost reduction impact of EUR 27 million (annualised EUR 108 million)
• Operating cash flow was strong at EUR 324 million (215 million)
Q1–Q2 2015 compared with Q1–Q2 2014
• Earnings per share excluding special items were EUR 0.62 (0.53), and reported EUR 0.59 (0.61)
• Operating profit excluding special items increased to EUR 431 million, 8.6% of sales (382 million, 7.8% of sales)
• UPM started commercial deliveries of advanced renewable diesel and completed the UPM Raflatac expansions in Poland and APAC
• UPM invests in the top-performing plywood and pulp businesses by expanding the Otepää plywood mill in Estonia and improving efficiency in the UPM Kaukas pulp mill
• UPM closed 800,000 tonnes of graphic paper production capacity in Europe
Key figures Q2/2015 Q2/2014 Q1/2015 Q1-Q2/2015 Q1-Q2/2014 Q1-Q4/2014
Sales, EURm 2,548 2,441 2,486 5,034 4,922 9,868
EBITDA, EURm 317 305 325 642 628 1,306
   % of sales 12.4 12.5 13.1 12.8 12.8 13.2
Operating profit (loss), EURm 206 176 203 409 367 674
   excluding special items, EURm 227 186 204 431 382 847
   % of sales 8.9 7.6 8.2 8.6 7.8 8.6
Profit (loss) before tax, EURm 182 159 181 363 396 667
   excluding special items, EURm 203 169 182 385 345 774
Profit (loss) for the period, EURm 160 129 155 315 322 512
Earnings per share, EUR 0.30 0.25 0.29 0.59 0.61 0.96
   excluding special items, EUR 0.33 0.26 0.29 0.62 0.53 1.17
Operating cash flow per share, EUR 0.61 0.40 0.20 0.81 0.90 2.33
Equity per share at end of period, EUR 14.30 13.76 14.61 14.30 13.76 14.02
Gearing ratio at end of period, % 35 40 31 35 40 32
Net interest-bearing liabilities at end of period, EURm 2,635 2,925 2,419 2,635 2,925 2,401
Jussi Pesonen, President and CEO comments on the results:

“Our second quarter showed good progress, our operating profit improved year-on-year and our operating cash flow was strong. Overall, the Group results were supported by our profit improvement programmes, particularly visible as lower variable costs.

UPM Biorefining, UPM Raflatac, UPM Plywood and UPM Paper Asia enjoyed favourable market conditions and achieved good performance. I’m pleased that we have ongoing growth projects in all of these businesses. Considering the current electricity markets UPM Energy made a fair result, mainly due to increased hydro power volumes.

Currency development had an overall positive impact on our Group results but affected our businesses differently. The positive currency impact supported the UPM Biorefining business, whereas the corresponding negative impact of currency hedges affected UPM Paper ENA and UPM Paper Asia. Strong pulp price development in euros boosted UPM Biorefining results but increased costs in our paper businesses.
During the second quarter, our UPM BioVerno renewable diesel was introduced to Finnish consumers, UPM Raflatac’s investments in APAC and in Poland were completed and a EUR 50 million investment was started at UPM Kaukas pulp mill in Lappeenranta, Finland. These, together with ongoing investments at the UPM Kymi pulp mill, Otepää plywood mill and UPM Changshu paper mill, will support profit growth in the upcoming quarters.

Overall, I remain confident about the continuing profit improvement programme and the ongoing growth projects. UPM continues to be well-positioned for earnings growth”.
Outlook for 2015

The improved profitability achieved in 2014 is expected to continue in 2015, and there are prospects for further improvement. Profitability is underpinned by the EUR 150 million profit improvement programme, favourable currencies, as well as the first positive impacts from the company’s growth projects. Profitability is affected by lower publication paper prices and lower electricity sales prices, compared to 2014.

In the second half of 2015 compared to the first half of 2015, UPM Paper ENA profitability is expected to improve.