Interim Report Q1/2017: UPM businesses deliver a strong start for 2017

Stock Exchange Release 25.4.2017 9:50 EEST

Interim Report Q1/2017: UPM businesses deliver a strong start for 2017

Q1 2017 highlights

  • Comparable EBIT increased by 8% to EUR 305 million (281 million).
  • Strong operational efficiency and good growth in deliveries.
  • Operating cash flow was strong at EUR 396 million (341 million).
  • Net debt decreased to EUR 807 million (1,873 million).
  • UPM announced divestments of hydropower assets in Germany, Austria and the US.
  • UPM renewed its long-term financial targets in January.
Key figures Q1/2017 Q1/2016 Q4/2016 Q1-Q4/2016
Sales, EURm 2,482 2,446 2,476 9,812
Comparable EBITDA, EURm 405 403 349 1,560
% of sales 16.3 16.5 14.1 15.9
Operating profit, EURm 312 277 232 1,135
Comparable EBIT, EURm 305 281 283 1,143
% of sales 12.3 11.5 11.4 11.6
Profit before tax, EURm 299 263 231 1,080
Comparable profit before tax, EURm 291 267 282 1,089
Profit for the period, EURm 240 227 187 880
Comparable profit for the period, EURm 234 225 220 879
Earnings per share (EPS), EUR 0.45 0.43 0.35 1.65
Comparable EPS, EUR 0.44 0.42 0.41 1.65
Return on equity (ROE), % 11.8 11.4 9.3 10.9
Comparable ROE, % 11.6 11.3 10.9 10.9
Return on capital employed (ROCE), % 12.0 9.9 9.4 10.5
Comparable ROCE, % 11.7 10.1 11.4 10.6
Operating cash flow, EURm 396 341 405 1,686
Operating cash flow per share, EUR 0.74 0.64 0.76 3.16
Equity per share at end of period, EUR 14.92 14.94 15.43 15.43
Capital employed at the end of period, EURm 9,919 11,000 10,657 10,657
Net debt at the end of period, EURm 807 1,873 1,131 1,131
Net debt to EBITDA (last 12 m.) 0.52 1,31 0.73 0.73
Personnel at the end of period 19,301 19,870 19,310 19,310

Jussi Pesonen, President and CEO, comments on Q1 result:

"UPM started year 2017 with a successful quarter. Our performance continued on a high level thanks to strong operational efficiency and good growth in deliveries. Our comparable EBIT increased by 8% to EUR 305 million and our balance sheet strengthened further. Operating cash flow was strong at EUR 396 million and our net debt decreased to EUR 807 million.

Growth was the main driver of the improved financial performance. Demand was good for most of our products and markets, particularly in Asia, and we were able to serve the increasing customer demand with the help of our recent growth initiatives. While we enjoyed a favourable market environment, we also experienced moderate input cost inflation, which we managed to contain well.

All businesses performed well during the first quarter. UPM Biorefining reached record production in Pulp, Biofuels and Timber. Our recent pulp debottlenecking investments have been successful and the ongoing investment at UPM Kymi pulp mill is proceeding well.

UPM Specialty Papers enjoyed strong markets and made good progress in driving its product mix forward, enabled by the new specialty paper machine in China. All of this was evident in the strong result for the quarter.

Both UPM Raflatac and UPM Plywood achieved record profits in the quarter, thanks to strong sales volumes and a favourable product mix. In Raflatac our efforts to strengthen our commercial capabilities are paying off and the labelstock investment in Poland is proceeding well. In Plywood, the Otepää investment in Estonia is already contributing to profitable growth in birch plywood.

UPM Paper ENA delivered another good quarter. We announced sale agreements of hydropower facilities in Germany, Austria and the US, which will add to Paper ENA's strong cash flow later this year. UPM Energy profits decreased due to a mild winter and low hydropower volumes.

We look confidently to the future as shown by our new ambitious long-term financial targets announced in January. We have competitive businesses with strong market positions and attractive growth opportunities. Going forward we continue to aim higher with our performance. With our cash flow and balance sheet we can distribute attractive dividends and invest in profitable growth simultaneously."

Outlook for 2017

UPM's profitability improved significantly in 2016 and is expected to remain on a good level in 2017.

Demand growth is expected to continue for most of UPM's businesses, while demand decline is expected to continue for UPM Paper ENA. The focused growth projects continue to contribute gradually to UPM's performance.

Following a deflationary environment in recent years, 2017 is expected to show modest input cost inflation. UPM will continue measures to reduce fixed and variable costs to mitigate this.

In Q2 2017, UPM's performance will be impacted by higher maintenance activity, especially in UPM Biorefining, UPM Paper ENA and UPM Energy, compared with Q1 2017.

Webcast and press conference

UPM's President and CEO Jussi Pesonen will present the 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 joined either by dialling a number in the list below or following the webcast online at 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 the conference call to ensure a timely start.

The presentation is available at for 12 months after the call.

Conference call title: UPM Interim Report for January - March 2017

Direct telephone numbers:

BE: +3224040635
DK: +45 823 331 78
FI: +358981710495
UK: +442031940552
NO: +4723500211
SE: +46856642702
US: +18557161597

International telephone numbers with a pin code 29298243#

AU: +61 29253 5844
AT: +43 19282 258   
CH: +44 44580 0083   
CN: +86 400 681 5421   
DE: +49 030 221 510 067   
ES: +34 911 143 608   
FR: +332 9092 0977   
HK: +852 3068 9834   
IN: 0018038524634
IR: +353 1696 8154   
IT: +39 2 3604 6798   
JP: +81 3 4455 9554   
NL: +31 20 716 8427   
SP: +65 6307 7610   


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 page 115 of the 2016 Annual Report. Risks and opportunities are discussed on pages 22-23 and risks and risk management are presented on pages 98-99 of the report.


UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations

UPM, Media Relations
Mon-Fri from 9:00 to 16:00 EET
tel. +358 40 588 3284

Through the renewing of the bio and forest industries, UPM is building a sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Paper ENA and UPM Plywood. Our products are made of renewable raw materials and are recyclable. We serve our customers worldwide. The group employs around 19,300 people and its annual sales are approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM - The Biofore Company -

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UPM presents certain performance measures of performance, financial position and cash flows, which are alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definitions of alternative performance measures are presented in notes to the consolidated financial statements in UPM Annual Report.

UPM Interim Report Q1 2017