UPM reports solid Q2 result despite challenging cost environment

Helsinki, 2011-08-03 08:31 CEST (GLOBE NEWSWIRE) -- Interim report for January–June 2011:

Q2/2011

• Earnings per share were EUR 0.56 (0.33), excluding special items EUR 0.26 (0.29)
• EBITDA was EUR 372 million, 15.4% of sales (353 million, 15.9% of sales)
• Strong operating cash flow at EUR 280 million (102 million)
• Took a major strategic step by completing the Myllykoski acquisition on 1 August 2011

Q1–Q2/2011:

• Earnings per share were EUR 0.89 (0.46), excluding special items EUR 0.58 (0.44)
• EBITDA was EUR 751 million, 15.7% of sales (641 million, 15.1% of sales)
• Profitability improved clearly – sales prices more than offset the rise in variable costs
• Net debt was EUR 675 million lower than a year ago

1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets, excluding the share of results of associated companies and joint ventures, and special items.

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

“Our operating profit improved clearly during the first half of the year despite the cost pressures. In the second quarter, we managed to maintain the quarterly operating profit on a steady level and our EBITDA increased from last year. We were able to offset the rise in variable costs through higher sales prices.

Market demand seems to have stabilized and cost development is levelling off. In these conditions the best way to make fundamental improvements in terms of profitability is through determined consolidation and restructuring. The Myllykoski acquisition gives UPM a unique momentum for profitability improvement. Already during the initial integration planning the merits of the transaction have been confirmed.

As the transaction is completed, UPM now has good prerequisites to maintain its position as the frontrunner in the field. The new combination offers us excellent opportunities to improve our cost competitiveness, also to the benefit of our customers. Although the transaction is an important step towards creating value in UPM’s Paper Business, it does not serve as a solution for all of the challenges faced by the industry’s players.

Within a year we have succeeded in reducing our net debt by EUR 675 million. It is testimony of a strong and solid operative cash flow. Our financial flexibility for further strategic manoeuvres is good and we intend to continue implementing strategic steps in our various businesses,” Pesonen concludes.

Outlook for 2011

Earnings guidance for 2011 remains unchanged. UPM operating profit excluding special items for 2011 is expected to improve from last year. In the second half of 2011, operating profit excluding special items is expected to be on about the same level as in the first half of 2011. The earnings guidance includes the acquired Myllykoski operations.

The broad-based solid demand growth in UPM’s products experienced in the previous quarters has levelled off. The demand outlook for UPM’s products is largely stable in the second half of 2011.

Variable cost increases seem to be moderating and only minor cost increases are expected in the second half of the year compared with the first half. UPM has achieved some price increases in the third quarter in publication papers, self-adhesive labelstock and plywood, which are expected to broadly offset the increases in variable costs.

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The complete Interim Report is available on the company website at www.upm.com

UPM will publish the Interim Report for January–September 2011 on 26 October 2011.

For more information please contact:
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001
Mr Tapio Korpeinen, CFO, UPM, tel. +358 204 15 0004

UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284
media@upm.com

Conference call and press conference 

UPM's President and CEO Jussi Pesonen will present the Interim Report in a conference call and webcast for analysts and investors, in English, on 3 August at 13:00 Finnish time (11:00 BST, 06:00 EST). 

Jussi Pesonen will also present the Interim Report in a press conference held in Finnish at UPM Group Head Office in Helsinki, Eteläesplanadi 2, on 3 August, at 14:15 Finnish time (12:15 BST, 07:15 EST).

Conference call and webcast details:

You can participate in the conference call either by dialling one of the numbers from the list below or following the webcast online at www.upm.com. 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 beforehand to ensure the conference starts timely. 

Conference call title: UPM-Kymmene Corporation Interim Report January–June 2011
Conference ID: 891580

Phone numbers:                                                                  

Participant - UK: +44 (0)20 7162 0025
Participant - North America Freephone: +1 877 491 0064
Participant - India Freephone: 000 8001 0035 51
Participant - India Freephone: 000 8001 0035 51
Participant - Australia LC: +61 (0)28 2239 543
Participant - Hong Kong LC: +852 300 278 26
Participant - Japan LC: +81 (3)45 8001 94
Participant - Malaysia LC: +60 (0)37 7124 471
Participant - New Zealand LC: +64 (0)99 1924 18
Participant - Singapore LC: +65 6823 2169
Participant - South Korea LC: +82 (0)23 4831 070
Participant - Taiwan LC: +886 (0)22 1626 701
Participant - Austria: +43 (0)268 2205 6292
Participant - Belgium: +32 (0)2 290 14 07
Participant - Czech Republic: +420 (2)3900 0635
Participant - Denmark: +45 3271 4607
Participant - Finland: +358 (0)9 2313 9201
Participant - France: +33 (0)1 7099 3208
Participant - Germany: +49 (0)695 8999 0507
Participant - Hungary: +36 (0)618 8932 15
Participant - Ireland: +353 (0)1 4364 106
Participant - Italy: +39 023 0350 9003
Participant - Luxembourg: +352 270 0073 408
Participant - Netherlands: +31 (0)20 7965 008
Participant - Norway: +47 2156 312 0
Participant - Spain: +34 9178 8989 6
Participant - Sweden: +46 (0)8 5052 0110
Participant - Switzerland (Geneva): +41 (0)2 2592 7007
Participant - Switzerland (Zurich): +41 (0)434 5692 61

The webcast can be replayed at www.upm.com for 12 months.    

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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, and 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. 

UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Corporate Communications

DISTRIBUTION
NASDAQ OMX Helsinki Ltd.
Main media
www.upm.com