Earnings per share, excluding special items, for the third quarter were EUR
0.23 (EUR 0.25 for the third quarter of 2006). EBITDA was EUR 366 million,
14.8% of sales (EUR 427 million, 17.1%). Operating profit excluding special
items was EUR 195 million (EUR 209 million). The increase in costs,
particularly wood costs, and the strengthened euro decreased profitability.
Key figures
Q3/ Q3/ Q1-Q3/ Q1-Q3/ Q1-Q4/
2007 2006 2007 2006 2006
Sales, EUR million 2,467 2,495 7,523 7,439 10,022
EBITDA, EUR million 1) 366 427 1,195 1,211 1,678
% of sales 14.8 17.1 15.9 16.3 16.7
Operating profit, 195 173 341 289 536
EUR million
excluding special 195 209 641 473 725
items, EUR million
Profit before tax, 144 129 200 164 367
EUR million
excluding special 144 165 500 348 550
items, EUR million
Net profit for the 119 147 52 143 338
period, EUR million
Earnings per share, 0.23 0.29 0.10 0.28 0.65
EUR
excluding special 0.23 0.25 0.76 0.50 0.80
items, EUR
Diluted earnings 0.23 0.28 0.10 0.27 0.65
per share, EUR
Return on equity, % 6.9 8.3 1.0 2.6 4.6
excluding special 6.9 7.2 7.5 4.8 5.7
items, %
Return on capital 6.8 5.9 4.1 3.4 4.7
employed, %
excluding special 6.8 7.1 7.6 5.4 6.2
items, %
Gearing ratio at 60 62 60 62 56
end of period, %
Shareholders' 13.24 13.58 13.24 13.58 13.90
equity per share at
end of period, EUR
Net interest-bearing 4,120 4,388 4,120 4,388 4,048
liabilities at end of
period, EUR million
Capital employed at 11,173 11,787 11,173 11,787 11,634
end of period, EUR
million
Capital 182 171 535 502 699
expenditure, EUR million
Personnel at end of 27,550 29,939 27,550 29,939 28,704
period
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.
Results
Q3 of 2007 compared with Q3 of 2006
Sales for the third quarter of 2007 were EUR 2,467 million (EUR 2,495 million).
Paper deliveries increased 4%.
Operating profit was EUR 195 million, 7.9% of sales (EUR 173 million, 6.9% of
sales). There were no special items for the third quarter of 2007. In the third
quarter of last year, operating profit, excluding special items, was EUR 209
million, 8.4% of sales.
Operating profit decreased due to lower paper prices and higher costs.
Especially wood and recycled paper costs were markedly higher. The average
price for all paper deliveries translated into euros was approximately 2% lower
than a year ago. The euro and the Canadian dollar both have strengthened
approximately 11% against the US dollar during the past twelve months. Change
in the fair value of biological assets net of wood harvested was EUR 21 million
(negative EUR 15 million). The share of results of associated companies and
joint ventures was EUR 14 million (EUR 18 million).
Profit before tax was EUR 144 million (EUR 129 million). Excluding special
items, profit before tax was EUR 144 million (EUR 165 million). Interest and
other finance costs, net, were EUR 42 million (EUR 41 million). Exchange rate
and fair-value gains and losses resulted in a loss of EUR 9 million (loss of
EUR 3 million).
Income taxes were EUR 25 million (positive EUR 18 million), which include as a
positive item an income tax rate change in Germany and the UK.
Profit for the third quarter was EUR 119 million (EUR 147 million). Earnings
per share were EUR 0.23 (EUR 0.29), and excluding special items EUR 0.23
(EUR 0.25).
First nine months of 2007 compared with first nine months of 2006
Sales for January-September were EUR 7,523 million, slightly higher than the
EUR 7,439 million in the same period in 2006. Paper deliveries increased by 5%.
Operating profit came to EUR 341 million, 4.5% of sales (EUR 289 million, 3.9%
of sales). Operating profit excluding special items was EUR 641 million, 8.5%
of sales (EUR 473 million, 6.4% of sales).
Cost increase was over 2% from last year. Wood and recycled paper saw the
highest price increases. Price increases in Finland were triggered by low
winter wood storage levels due to the mild winter and the increase in export
duties on Russian wood. In Central Europe, alternate uses of wood competed with
fibre usage for paper making. Energy costs, on the other hand, were lower than
a year ago. Fixed costs decreased as overall operational efficiency improved
partly because of closures of the production facilities. Delivery volumes of
paper and self-adhesive label materials were higher than last year. The average
price for newsprint and uncoated fine paper when translated into euros
increased, while the average price for magazine and coated fine papers declined
from the corresponding period of last year. Profitability of exports suffered
from the strengthening of the euro and the Canadian dollar. The increase in the
fair value of biological assets, net of wood harvested, was EUR 32 million
(decrease of EUR 121 million). The share of results of associated companies and
joint ventures was EUR 41 million (EUR 52 million).
Profit before tax was EUR 200 million (EUR 164 million) and excluding special
items EUR 500 million (EUR 348 million). Interest and other finance costs, net,
were EUR 145 million (EUR 139 million). Exchange rate and fair-value gains and
losses resulted in a gain of EUR 2 million (gain of EUR 14 million).
Income taxes were EUR 148 million (EUR 21 million), and the effective tax rate,
excluding the impact of special items was 24% (26%).
Profit for the period was EUR 52 million (EUR 143 million). Earnings per share
were EUR 0.10 (EUR 0.28) and excluding special items, EUR 0.76 (EUR 0.50).
Operating cash flow per share was EUR 1.09 (EUR 1.53).
Paper deliveries
Paper deliveries for the first nine months were 8,472,000 (8,096,000) tonnes.
Magazine paper deliveries were 3,610,000 (3,473,000) tonnes, newsprint
1,980,000 (1,980,000) tonnes, and fine and speciality papers 2,882,000
(2,643,000) tonnes.
Financing
Cash flow from operating activities, before capital expenditure and financing,
was EUR 573 million (EUR 800 million). The increase in net working capital
amounted to EUR 271 million (EUR 71 million).
The gearing ratio as of 30 September 2007 was 60% (62% on 30 September 2006).
Equity to assets ratio on 30 September was 49.1% (48.8%). Net interest-bearing
liabilities at the end of the period were EUR 4,120 million (EUR 4,388
million).
Personnel
In January-September, UPM had an average of 28,830 employees (31,643 employees
for Q1-Q3/2006). The number of employees at the end of September was 27,550
(29,939). Walki Wisa, which was sold in June 2007, employed approximately 950
people in 2006.
Capital expenditure and restructuring
For the first nine months, gross capital expenditure was EUR 535 million, 7.1%
of sales (EUR 502 million, 6.7% of sales).
At the Tervasaari mill, the new bleaching line for pulp started up in
September, allowing increased use of integrated pulp. As part of the
profitability programme, brown sack paper machine PM6 and the special chemical
pulp line were closed in August.
The largest ongoing investment, a EUR 325 million rebuild of the recovery plant
at the Kymi pulp mill, is proceeding according to plan.
The start up of UPM associated company Botnia's pulp mill in Uruguay will
commence as soon as the permit procedure is finalised and the Uruguayan
authorities give their permission.
Shares
In total, UPM shares worth EUR 12,812 million were traded on the Helsinki Stock
Exchange (EUR 12,307 million) in January-September. The highest quotation was
EUR 20.59 in February and the lowest EUR 14.87 in August. On the New York Stock
Exchange, the company's shares were traded to a total value of USD 213 million
(244 million).
The Annual General Meeting held on 27 March 2007 approved a proposal by the
Board of Directors to buy back not more than 52,000,000 own shares. The
authorisation is valid for 18 months. The meeting authorised the board to
decide on the disposal of shares so acquired as well as on a free issue of
shares to the company itself so that the total number of shares to be issued to
the company combined with the number of own shares bought back under the
buy-back authorisation may not exceed 1/10 of the total number of shares of the
company.
On 20 August 2007, the UPM Board of Directors decided to buy back up to
16,400,000 own shares. The share buy-backs were initiated on 29 August. At the
end of the period, UPM had bought back 11,840,000 of its own shares for EUR
196.7 million, for an average price of EUR 16.61.
Additionally, the Annual General Meeting authorised the Board of Directors to
decide to issue shares and special rights entitling to shares of the company.
The number of new shares to be issued, including shares to be obtained under
special rights, shall be no more than 250,000,000. Of that amount, the maximum
number that can be issued to the company's shareholders based on their
pre-emptive rights is 250,000,000 shares and the maximum amount that can be
issued deviating from the shareholders' pre-emptive rights in a directed share
issue is 100,000,000 shares. The maximum number of new shares to be issued as
part of the company's incentive programmes is 5,000,000 shares. The
authorisation is valid for no more than three years from the date of the
decision. To date, this authorisation has not been used.
The meeting also decided on granting share options in connection with the
company's share-based incentive plans. In option programmes 2007 A, 2007 B, and
2007 C, the total number of share options is no more than 15,000,000, and they
will entitle to subscribe for, in total, no more than 15,000,000 new shares of
the company. To date, this authorisation has not been used.
The meeting decided to decrease the share premium reserve by the amount of
EUR 776,122,940.18, and the legal reserve by the amount of EUR 187,227,209.68
as shown in the balance sheet of the parent company as per 31 December 2006.
The changes were executed on 1 August. The reserves were transferred to the
invested non-restricted equity fund.
Apart from the above, the Board of Directors has no current authorisation to
issue shares, convertible bonds, or share options.
On 17 September 2007, UPM applied for listing of 2005G stock options on the OMX
Nordic Exchange Helsinki. The total number of stock options is 3,000,000, each
entitling for a subscription of one share.
In the third quarter of 2007, no shares were subscribed for through exercising
of outstanding share options.
The number of shares entered in the Trade Register on 30 September 2007 was
528,969,320. Through the issuance authorisation and share options, the number
of shares may increase to a maximum of 810,558,420.
On 13 September 2007, the Capital Group Companies, Inc. informed that the
Finnish Financial Supervision Authority had granted exemption to the Capital
Group Companies, Inc. to report its holdings and those of Capital Group
International, Inc. separately from those of Capital Research and Management
Company. Pursuant to this exemption, the aggregate holdings of Capital Group
Companies, Inc.; Capital Group International, Inc.; and its subsidiaries had
fallen below 5% of the shares and voting rights of UPM-Kymmene Corporation. The
aggregate holdings on 12 September 2007 were 11,388,908 shares, representing
2.15% of the shares and voting rights. The Capital Research and Management
Company held, on 12 September 2007, a total of 16,035,800 UPM-Kymmene
Corporation shares, representing 3.03% of the shares and voting rights.
Litigation
Certain competition authorities are continuing investigations into alleged
antitrust activities with respect to various products of the company.
The US Department of Justice, the EU authorities, and the authorities in
several EU Member States, Canada and certain other countries have granted UPM
conditional full immunity with respect to certain conduct disclosed to them.
The US and Canadian investigations are now closed, and the European Commission
has tentatively closed its investigation of the European fine paper, newsprint,
magazine paper, label paper, and self-adhesive labelstock markets.
UPM has been named as a defendant in multiple class-action lawsuits against
labelstock and magazine paper manufacturers in the United States. The remaining
litigation matters may last several years. No provisions have been made in
relation to these investigations or litigations.
Events after the balance sheet date
On 11 October 2007, UPM sold port operators Rauma Stevedoring and Botnia
Shipping to Babcock & Brown Infrastructure (BBI) for approximately EUR 90
million. These companies had 665 employees as of 30 September 2007.
On 17 October 2007, UPM decided to close the Keuruu Veneer mill. The operations
will cease in spring 2008.
On 30 October 2007, UPM decided to terminate listing of its American Depositary
Shares (ADS) from the New York Stock Exchange (NYSE) and seek deregistration
and termination of its reporting obligations under the Securities Exchange
Act of 1934.
Apart from the above, the Group's management is not aware of any significant
events occurring after 30 September that would have an impact on the financial
statements.
Outlook for the fourth quarter
In Europe, demand for printing papers is forecast to grow slightly from the
corresponding quarter of last year, while in North America it is expected to
decrease. Strong growth in demand is expected to continue in emerging markets.
UPM estimates its paper deliveries to be about the same as last year and the
average price for all paper deliveries to be about the same as it was in the
third quarter of 2007.
Demand for self-adhesive label materials will be seasonally high in all main
markets, and prices are expected to remain at current level.
In wood products, good demand for plywood continues. Sawn-timber demand will be
softer than earlier in the year. Availability of birch logs may limit
production of birch plywood in the course of the period.
The company's overall cost inflation for 2007 is estimated to be approximately
2.5% including the expected cost savings from the ongoing profitability
programme.
Divisional reviews
Magazine Papers
Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/ Q1-Q3/
07 07 07 06 06 06 06 07 06
Sales, EUR million 847 798 793 905 861 817 771 2,438 2,449
EBITDA, EUR million 1) 116 114 113 157 155 145 113 343 413
% of sales 13.7 14.3 14.2 17.3 18.0 17.7 14.7 14.1 16.9
Depreciation, -82 -443 -86 -88 -209 -210 -97 -611 -516
amortisation and
impairment charges,
EUR million
Operating profit, 34 -339 27 75 -62 -85 16 -278 -131
EUR million
% of sales 4.0 -42.5 3.4 8.3 -7.2 -10.4 2.1 -11.4 -5.3
Special items, EUR - -371 - 6 -126 -133 - -371 -259
million 2)
Operating profit 34 32 27 69 64 48 16 93 128
excl. special
items, EUR million
% of sales 4.0 4.0 3.4 7.6 7.4 5.9 2.1 3.8 5.2
Deliveries, 1,000t 1,266 1,189 1,155 1,288 1,227 1,148 1,098 3,610 3,473
Q1-Q4/
06
Sales, EUR million 3,354
EBITDA, EUR million 1) 570
% of sales 17.0
Depreciation, -604
amortisation and
impairment charges,
EUR million
Operating profit, -56
EUR million
% of sales -1.7
Special items, EUR -253
million 2)
Operating profit 197
excl. special
items, EUR million
% of sales 5.9
Deliveries, 1,000t 4,761
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges and excluding special items.
2) Special items in the second quarter of 2007 include a goodwill impairment
charge of EUR 350 million, an impairment charge of EUR 22 million and personnel
costs of EUR 10 million related to the Miramichi paper mill, and an income of
EUR 11 million related to impairment reversals. Special items in the second
quarter of 2006 include personnel charges of EUR 20 million related to the
profitability programme, and impairment charges of EUR 113 million related to
the closure of the Voikkaa paper mill. In the third quarter, special items
include personnel charges of EUR 8 million and impairment charges of EUR 3
million at Voikkaa, and impairment charges of EUR 115 million for Miramichi. In
the fourth quarter, special items relate primarily to the capital gain on the
sale of the Rauma power plant.
Q3 of 2007 compared with Q3 of 2006
The operating profit, excluding special items, for Magazine Papers was EUR 34
million, EUR 30 million lower than a year ago (EUR 64 million). Sales were EUR
847 million (EUR 861 million). Paper deliveries increased by 3% to 1,266,000
(1,227,000) tonnes.
Profitability weakened compared with the same period last year. The main
reasons for the decline were lower paper prices and markedly increased fibre
costs. The euro and the Canadian dollar strengthened, reducing profitability of
exports. In Europe average prices decreased from last year and the average
price for all magazine paper deliveries when translated into euros was over 6%
lower than a year ago.
The Miramichi magazine paper mill in Canada, with a capacity of 450,000 t/a,
was shut down for 9-12 months at the end of August.
Q1-Q3 of 2007 compared with Q1-Q3 of 2006
The operating profit, excluding special items, for Magazine Papers was EUR 93
million, EUR 35 million lower than in Q1-Q3 of the previous year (EUR 128
million). Sales amounted to EUR 2,438 million, slightly below last year's level
(EUR 2,449 million). Paper deliveries increased by 4% to 3,610,000 (3,473,000)
tonnes.
Profitability decreased from the same period in 2006. Efficiency improved with
the closures of uncompetitive capacity, and fixed costs were lower. The
positive impact of cost savings was, however, offset by lower paper prices and
higher fibre costs. The euro and the Canadian dollar strengthened, reducing
profitability of exports. When translated into euros, the average price for all
magazine paper deliveries was approximately 5% lower than a year ago.
Market review
During January-September, magazine paper demand in Europe continued to be good,
driven by a strong increase in demand in Eastern Europe. Demand for both coated
and uncoated magazine paper increased by about 4% from that seen in the same
period in 2006. Export of magazine paper from Europe decreased from the
previous year. The average market price for magazine papers in Europe was 3%
down from last year's figure.
In North America, demand for coated magazine paper increased by about 5% and
the figure for uncoated magazine paper increased by about 6%. In North America,
USD prices decreased by about 8%.
Newsprint
Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/
07 07 07 06 06 06 06 07
Sales, EUR million 365 379 348 380 360 351 345 1,092
EBITDA, EUR million 1) 91 100 92 89 98 86 72 283
% of sales 24.9 26.4 26.4 23.4 27.2 24.5 20.9 25.9
Depreciation, -47 -47 -48 -48 -48 -47 -47 -142
amortisation and
impairment charges,
EUR million
Operating profit, 44 53 44 39 50 34 25 141
EUR million
% of sales 12.1 14.0 12.6 10.3 13.9 9.7 7.2 12.9
Special items, EUR - - - -2 - -5 - -
million 2)
Operating profit 44 53 44 41 50 39 25 141
excl. special
items, EUR million
% of sales 12.1 14.0 12.6 10.8 13.9 11.1 7.2 12.9
Deliveries, 1,000 t 667 683 630 697 666 660 654 1,980
Q1-Q3/ Q1-Q4/
06 06
Sales, EUR million 1,056 1,436
EBITDA, EUR million 1) 256 345
% of sales 24.2 24.0
Depreciation, -142 -190
amortisation and
impairment charges,
EUR million
Operating profit, 109 148
EUR million
% of sales 10.3 10.3
Special items, EUR -5 -7
million 2)
Operating profit 114 155
excl. special
items, EUR million
% of sales 10.8 10.8
Deliveries, 1,000 t 1,980 2,677
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges and excluding special items.
2) The special items booked for 2006 relate mainly to the profitability
programme.
Q3 of 2007 compared with Q3 of 2006
For Newsprint, operating profit, excluding special items, decreased to EUR 44
million (EUR 50 million). Sales were EUR 365 million (EUR 360 million). Paper
deliveries amounted to 667,000 tonnes (666,000 tonnes).
Paper prices were higher but an increase in recycled fibre and wood costs
weakened profitability. Lower energy costs mitigated the negative impact of
higher fibre costs. The average price for all newsprint deliveries, when
translated into euros, was up about 1% on the figure for the corresponding
quarter in 2006. The price development was affected by the change in sales mix.
Q1-Q3 of 2007 compared with Q1-Q3 of 2006
Operating profit, excluding special items, for Newsprint came to EUR 141
million, EUR 27 million higher than a year ago (EUR 114 million). Sales were
EUR 1,092 million (EUR 1,056 million). Paper deliveries were the same as a year
ago, at 1,980,000 tonnes.
The main contributor to the improved profitability was the higher price of
newsprint. The average price for all newsprint deliveries when translated into
euros was 3% higher than a year ago, despite a decline of overseas market
prices. Costs savings from energy investments mitigated the impact of increased
recycled fibre and wood costs.
Market review
The first nine months of the year saw demand for standard and improved
newsprint decrease by about 2% in Europe when compared with the figure for the
same period last year. Imports to Europe increased from the previous year. In
Europe, the average market price for standard newsprint was about 5% higher
than a year ago.
In the other markets, with the exception of North America, demand increased but
prices were lower than in the same period in 2006.
Fine and Speciality Papers
Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/
07 07 07 06 06 06 06 07
Sales, EUR million 694 686 699 667 626 627 640 2,079
EBITDA, EUR million 1) 82 92 85 104 106 76 82 259
% of sales 11.8 13.4 12.2 15.6 16.9 12.1 12.8 12.5
Depreciation, -53 -53 -53 -56 -55 -71 -55 -159
amortisation and
impairment charges,
EUR million
Operating profit, 29 39 32 44 50 -13 27 100
EUR million
% of sales 4.2 5.7 4.6 6.6 8.0 -2.1 4.2 4.8
Special items, EUR - - - -3 -2 -36 - -
million 2)
Operating profit 29 39 32 47 52 23 27 100
excl. special
items, EUR million
% of sales 4.2 5.7 4.6 7.0 8.3 3.7 4.2 4.8
Deliveries, 1,000 t 954 960 968 907 878 884 881 2,882
Q1-Q3/Q1-Q4 /
06 06
Sales, EUR million 1,893 2,560
EBITDA, EUR million1) 264 368
% of sales 13.9 14.4
Depreciation, -181 -237
amortisation and
impairment charges,
EUR million
Operating profit, 64 108
EUR million
% of sales 3.4 4.2
Special items, EUR -38 -41
million 2)
Operating profit 102 149
excl. special
items, EUR million
% of sales 5.4 5.8
Deliveries, 1,000 t 2,643 3,550
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges and excluding special items.
2) In 2006, special items include personnel and impairment charges related to
the profitability programme.
Q3 of 2007 compared with Q3 of 2006
The operating profit, excluding special items, for Fine and Speciality Papers
came to EUR 29 million which is EUR 23 million less than last year (EUR 52
million). Sales increased from EUR 626 million to EUR 694 million. Paper
deliveries increased by 9% to 954,000 (878,000) tonnes.
The average price for all fine and speciality paper deliveries when translated
into euros was about 2% higher than a year ago. Increase in fibre costs,
however, more than offset the positive impact of higher average prices and
increased delivery volumes. Strengthening of the euro against the US dollar
weakened the profitability of exports.
Q1-Q3 of 2007 compared with Q1-Q3 of 2006
The operating profit, excluding special items, for Fine and Speciality Papers
was EUR 100 million, almost the same as last year (EUR 102 million). Sales
increased from EUR 1,893 million to EUR 2,079 million. Paper deliveries
amounted to 2,882,000 tonnes, 9% higher than a year ago (2,643,000 tonnes).
More efficient utilisation of capacity and investments at the Changshu mill
last year were the main contributors to the higher delivery volumes.
The profitability of the division was almost the same as last year. When
translated into euros, the average price for all fine and speciality paper
deliveries was about 1% higher than a year ago. Increased efficiency and higher
average paper prices mitigated the impact of increased fibre costs.
Strengthening of the euro against the US dollar weakened profitability of
exports.
Market review
In Europe, demand for coated fine paper increased by about 2% while that for
uncoated fine paper remained the same when compared with the corresponding
period last year. In Europe, the average market price for coated fine paper was
about 1% higher and that for uncoated fine paper about 7% higher than in the
same period last year. The good demand for packaging papers continued. Growth
in demand for label papers slowed down from the previous year.
In Asia, demand and prices for fine paper increased from last year.
Label Materials
Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/
07 07 07 06 06 06 06 07
Sales, EUR million 252 260 261 251 240 245 251 773
EBITDA, EUR million 1) 18 21 26 25 20 24 24 65
% of sales 7.1 8.1 10.0 10.0 8.3 9.8 9.6 8.4
Depreciation, -8 -8 -8 -8 -9 -8 -7 -24
amortisation and
impairment charges,
EUR million
Operating profit, 10 13 18 17 11 16 17 41
EUR million
% of sales 4.0 5.0 6.9 6.8 4.6 6.5 6.8 5.3
Special items, EUR - - - - - - - -
million
Operating profit 10 13 18 17 11 16 17 41
excl. special
items, EUR million
% of sales 4.0 5.0 6.9 6.8 4.6 6.5 6.8 5.3
Q1-Q3/ Q1-Q4/
06 06
Sales, EUR million 736 987
EBITDA, EUR million 1) 68 93
% of sales 9.2 9.4
Depreciation, -24 -32
amortisation and
impairment charges,
EUR million
Operating profit, 44 61
EUR million
% of sales 6.0 6.2
Special items, EUR - -
million
Operating profit 44 61
excl. special
items, EUR million
% of sales 6.0 6.2
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges and excluding special items.
Q3 of 2007 compared with Q3 of 2006
The operating profit, excluding special items, for Label Materials was EUR 10
million (EUR 11 million). Sales increased to EUR 252 million (EUR 240 million).
The division's profitability was slightly lower than last year. Delivery
volumes of self-adhesive label materials grew in the European and North
American markets. In Asia, volumes increased due to the start-up of the new
factory in China at the end of 2006 and opening of new distribution terminals
in the region. For RFID, third-quarter development of volumes was strong.
Q1-Q3 of 2007 compared with Q1-Q3 of 2006
Label Materials' operating profit, excluding special items, was EUR 41 million
(EUR 44 million). Sales increased to EUR 773 million (EUR 736 million).
The profitability of the division continued to be good despite a strong
expansion of operations. Sales growth was affected by the stronger euro and
changes in the product mix. In local currencies, the average price of
self-adhesive label materials declined in most markets due to the highly
competitive market situation. There were no marked changes in raw material
prices. In RFID business, strong growth in volume continued.
Market review
In Europe, the good demand continued in the first half of the year, but there
were some signs of it slowing down during the third quarter. In North America,
demand for self-adhesive label materials improved somewhat in the third
quarter, after the flat first half of the year. In the Asia-Pacific region,
demand continued to grow at a healthy rate, which helped to maintain stable
prices.
For RFID, the retail and logistics markets were the strongest in Europe, while
the media management, especially library sector, showed the strongest growth in
the USA.
Wood Products
Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/
07 07 07 06 06 06 06 07
Sales, EUR million 262 326 314 287 310 378 346 902
EBITDA, EUR million 1) 8 51 42 24 22 33 25 101
% of sales 3.1 15.6 13.4 8.4 7.1 8.7 7.2 11.2
Depreciation, -10 -11 -10 -10 -11 -11 -11 -31
amortisation and
impairment charges,
EUR million
Operating profit, -2 41 32 14 104 22 4 71
EUR million
% of sales -0.8 12.6 10.2 4.9 33.5 5.8 1.2 7.9
Special items, EUR - - - - 93 - -10 -
million 2)
Operating profit -2 41 32 14 11 22 14 71
excl. special
items, EUR million
% of sales -0.8 12.6 10.2 4.9 3.5 5.8 4.0 7.9
Deliveries, plywood 204 247 255 243 205 232 251 706
1,000 m3
Deliveries, sawn 480 637 587 598 517 622 580 1,704
timber 1,000 m3
Q1-Q3/ Q1-Q4/
06 06
Sales, EUR million 1,034 1,321
EBITDA, EUR million 1) 80 104
% of sales 7.7 7.9
Depreciation, -33 -43
amortisation and
impairment charges,
EUR million
Operating profit, 130 144
EUR million
% of sales 12.6 10.9
Special items, EUR 83 83
million 2)
Operating profit 47 61
excl. special
items, EUR million
% of sales 4.5 4.6
Deliveries, plywood 688 931
1,000 m3
Deliveries, sawn 1,719 2,317
timber 1,000 m3
1) EBITDA is operating profit before depreciation, amortisation and impairment
charges and excluding special items.
2) Special items in the first quarter of 2006 include a loss of EUR 10 million
from the sale of the Loulay plywood mill, and in the third quarter, a capital
gain of EUR 93 million on the sale of Puukeskus.
Q3 of 2007 compared with Q3 of 2006
The operating profit, excluding special items, for Wood Products declined from
EUR 11 million, to a EUR 2 million loss. Sales came to EUR 262 million (EUR 310
million, including Puukeskus). Plywood deliveries were 204,000 (205,000) cubic
metres in volume and sawn timber deliveries 480,000 (517,000) cubic metres.
The profitability of Wood Products suffered as a result of sharply rising wood
costs. The profitability of plywood remained slightly behind the previous
year's level. Availability of birch logs was tight, causing less optimal use of
production capacity. Sawmilling's profitability clearly decreased due to higher
log prices and a soft market situation.
Q1-Q3 of 2007 compared with Q1-Q3 of 2006
The operating profit, excluding special items, for the Wood Products was EUR 71
million, EUR 24 million higher than last year (EUR 47 million). Sales came to
EUR 902 million (EUR 1,034 million). Excluding Puukeskus Oy, which was sold in
August 2006, sales increased from last year. Plywood deliveries were 706,000
(688,000) cubic metres and sawn timber deliveries 1,704,000 (1,719,000) cubic
metres.
Despite the unsatisfactory third-quarter results, the profitability of the
division was better than it was last year. Plywood profitability continued to
be good, and sawmilling performed clearly better than last year.
Market review
In the first nine months of the year, birch plywood demand continued to be
strong and prices increased. Demand for spruce plywood and veneers remained
solid and prices remained stable.
In the first half of the year, redwood and whitewood sawn timber demand was
strong and prices increased. Following the summer, the markets have slowed down
and inventories have increased.
In the beginning of the year the supply of logs was tight but the situation has
normalised for all species except the birch. Prices of logs were considerably
higher than in the corresponding period a year ago.
Other Operations
EUR million Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/
07 07 07 06 06 06 06 07
Sales 1) 173 214 234 224 206 189 204 621
EBITDA 2) 51 32 60 69 27 33 70 143
Depreciation, -6 -5 -10 -9 -9 -9 -6 -21
amortisation and
impairment charges
Operating profit
Forestry 3) 43 34 28 23 20 -82 20 105
Energy Department, 23 19 28 36 - 18 40 70
Finland
Other and - 59 -9 -10 -18 28 -5 50
eliminations 4)
Operating profit, 66 112 47 49 2 -36 55 225
total
Special items 4) - 71 - -6 -1 41 -5 71
Operating profit 66 41 47 55 3 -77 60 154
excl. special items
EUR million Q1-Q3/ Q1-Q4/
06 06
Sales 1) 599 823
EBITDA 2) 130 199
Depreciation, -24 -32
amortisation and
impairment charges
Operating profit
Forestry 3) -42 -19
Energy Department, 58 94
Finland
Other and 5 -5
eliminations 4)
Operating profit, 21 70
total
Special items 4) 35 29
Operating profit -14 41
excl. special items
1) Includes sales outside the Group.
2) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and special items.
3) The second quarter of 2006 includes a change of EUR 102 million of the
decrease in the fair value of biological assets and wood harvested.
4) Special items in the second quarter of 2007 include capital gains of EUR 42
million related to the sale of UPM-Asunnot and EUR 29 million related to the
sale of Walki Wisa. Special items in 2006 include in the first quarter the
donation of EUR 5 million to UPM-Kymmene Cultural Foundation, and in the second
quarter the capital gain of EUR 41 million for the sale of the Group head
office real estate.
Q3 of 2007 compared with Q3 of 2006
Excluding special items, the operating profit for Other Operations was EUR 66
million (EUR 3 million). Sales amounted to EUR 173 million (EUR 206 million).
The operating profit of Forestry was EUR 43 million (EUR 20 million). The
increase in the fair value of biological assets (growing trees) was EUR 49
million (EUR 19 million), and the cost of wood raw material harvested from the
Group's forests was EUR 28 million (EUR 34 million).
For the Energy Department in Finland, operating profit was EUR 23 million (EUR
0 million). Availability of hydropower was good. The Nord Pool price of
electricity increased in the period under review but still remained lower than
last year.
Q1-Q3 of 2007 compared with Q1-Q3 of 2006
Excluding special items, the operating profit of Other Operations was EUR 154
million (loss of EUR 14 million). Sales were EUR 621 million (EUR 599 million).
The increase in the fair value of biological assets (growing trees) was EUR 121
million (decrease of EUR 41 million). The cost of wood raw material harvested
from the Group's forests was EUR 89 million (EUR 80 million).
Associated companies and joint ventures
EUR million Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/ Q1-Q3/
07 07 07 06 06 06 06 07 06
Share of result after tax
Oy Metsä-Botnia Ab 19 12 21 18 24 13 14 52 51
Pohjolan Voima Oy -5 -5 - -9 -7 -5 7 -10 -5
Other - -1 - - 1 - 5 -1 6
Total 14 6 21 9 18 8 26 41 52
EUR million Q1-Q4/
06
Share of result after tax
Oy Metsä-Botnia Ab 69
Pohjolan Voima Oy -14
Other 6
Total 61
Deliveries
Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q1-Q3/
07 07 07 06 06 06 06 07
Paper deliveries
Magazine papers, 1,266 1,189 1,155 1,288 1,227 1,148 1,098 3,610
1,000 t
Newsprint, 1,000 t 667 683 630 697 666 660 654 1,980
Fine and speciality 954 960 968 907 878 884 881 2,882
papers, 1,000 t
Paper deliveries 2,887 2,832 2,753 2,892 2,771 2,692 2,633 8,472
total
Wood products deliveries
Plywood 1,000 m3 204 247 255 243 205 232 251 706
Sawn timber 1,000 m3 505 666 617 621 557 663 616 1,788
Q1-Q3/ Q1-Q4/
06 06
Paper deliveries
Magazine papers, 3,473 4,761
1,000 t
Newsprint, 1,000 t 1,980 2,677
Fine and speciality 2,643 3,550
papers, 1,000 t
Paper deliveries 8,096 10,988
total
Wood products deliveries
Plywood 1,000 m3 688 931
Sawn timber 1,000 m3 1,836 2,457
Helsinki, 30 October 2007
UPM-Kymmene Corporation
Board of Directors
Financial information
This Interim Report is unaudited
Condensed consolidated income statement
EUR million Q3/ Q3/ Q1-Q3/ Q1-Q3/ Q1-Q4/
2007 2006 2007 2006 2006
Sales 2,467 2,495 7,523 7,439 10,022
Other operating 15 103 113 211 231
income
Costs and expenses -2,116 -2,088 -6,380 -6,373 -8,514
Change in fair 21 -15 32 -121 -126
value of
biological assets
and wood harvested
Share of results of 14 18 41 52 61
associated companies
and joint ventures
Depreciation, -206 -340 -988 -919 -1,138
amortisation and
impairment charges
Operating profit 195 173 341 289 536
Gains/losses on - - 2 - -2
available-for-sale
investments, net
Exchange rate and -9 -3 2 14 18
fair value gains
and losses
Interest and other -42 -41 -145 -139 -185
finance costs
Profit before tax 144 129 200 164 367
Income taxes -25 18 -148 -21 -29
Profit for the period 119 147 52 143 338
Attributable to:
Equity holders of 120 148 53 144 340
the parent company
Minority interest -1 -1 -1 -1 -2
119 147 52 143 338
Basic earnings per 0.23 0.29 0.10 0.28 0.65
share, EUR
Diluted earnings 0.23 0.28 0.10 0.27 0.65
per share, EUR
Condensed consolidated balance sheet
EUR million 30.09.07 30.09.06 31.12.06
ASSETS
Non-current assets
Goodwill 1,163 1,514 1,514
Other intangible assets 408 486 461
Property, plant and 6,276 6,595 6,500
equipment
Biological assets 1,051 1,044 1,037
Investments in 1,188 1,165 1,177
associated companies and
joint ventures
Deferred tax assets 316 363 362
Other non-current assets 290 306 304
10,692 11,473 11,355
Current assets
Inventories 1,325 1,264 1,255
Trade and other 1,824 1,730 1,660
receivables
Cash and cash 121 147 199
equivalents
3,270 3,141 3,114
Assets held for sale 41 - -
Total assets 14,003 14,614 14,469
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent company
Share capital 890 890 890
Share premium reserve - 826 826
Fair value and 947 219 189
other reserves
Retained earnings 5,010 5,168 5,366
6,847 7,103 7,271
Minority interest 16 19 18
Total equity 6,863 7,122 7,289
Non-current liabilities
Deferred tax liabilities 753 820 790
Non-current interest- 3,115 3,904 3,353
bearing liabilities
Other non-current 584 652 627
liabilities
4,452 5,376 4,770
Current liabilities
Current interest- 1,195 761 992
bearing liabilities
Trade and other 1,483 1,355 1,418
payables
2,678 2,116 2,410
Liabilities related 10 - -
to assets held for sale
Total liabilities 7,140 7,492 7,180
Total equity and 14,003 14,614 14,469
liabilities
Condensed consolidated statement of changes in equity
Attributable to equity holders of the parent
EUR million Share Treasure Translat- Fair
capital shares ion Share value
differ- premium and other
ences reserve reserves
Balance at 1 890 -3 -34 826 233
January 2006
Transactions with equity holders
Share options exercised - - - - -
Reissuance of - 3 - - -
treasury shares
Share-based compensation - - - - 7
Dividend paid - - - - -
Business combination - - - - -
Income and expenses recognised directly in equity
Translation differences - - -30 - -
Other items - - - - -2
Net investment hedge, - - 8 - -
net of tax
Cash flow hedges
recorded in equity, - - - - 34
net of tax
transferred to - - - - 3
income statement, net of tax
Available-for-sale investments
transferred to - - - - -
income statement, net of tax
Profit for the period - - - - -
Balance at 30 890 - -56 826 275
September 2006
Balance at 1 890 - -89 826 278
January 2007
Transactions with equity holders
Share options exercised - - - - -
Acquisitions of - -197 - - -
treasury shares
Share-based compensation, - - - - 12
net of tax
Dividend paid - - - - -
Transfers and other - - - -826 -122
Income and expenses recognised directly in equity
Translation differences - - -16 - -
Other items - - - - -2
Cash flow hedges
recorded in equity, - - - - 43
net of tax
transferred to - - - - -25
income statement, net of tax
Available-for-sale investments
transferred to - - - - -2
income statement, net of tax
Profit for the period - - - - -
Balance at 30 890 -197 -105 - 182
September 2007
EUR million
Attributable to equity holders of the parent
Reserve for Retained Total Minority Equity
invested earnings interest total
non-restricted
equity
Balance at 1 - 5,415 7,327 21 7,348
January 2006
Transactions with equity holders
Share options exercised - - - - -
Reissuance of - 1 4 - 4
treasury shares
Share-based compensation - - 7 - 7
Dividend paid - -392 -392 - -392
Business combination - - - -1 -1
Income and expenses recognised directly in equity
Translation differences - - -30 - -30
Other items - - -2 - -2
Net investment hedge, - - 8 - 8
net of tax
Cash flow hedges
recorded in equity, - - 34 - 34
net of tax
transferred to - - 3 - 3
income statement, net of tax
Available-for-sale investments
transferred to - - - - -
income statement, net of tax
Profit for the period - 144 144 -1 143
Balance at 30 - 5,168 7,103 19 7,122
September 2006
Balance at 1 - 5,366 7,271 18 7,289
January 2007
Transactions with equity holders
Share options exercised 104 - 104 - 104
Acquisitions of - - -197 - -197
treasury shares
Share-based compensation, - - 12 - 12
net of tax
Dividend paid - -392 -392 - -392
Transfers and other 963 -16 -1 -1 -2
Income and expenses recognised directly in equity
Translation differences - - -16 - -16
Other items - -1 -3 - -3
Cash flow hedges
recorded in equity, - - 43 - 43
net of tax
transferred to - - -25 - -25
income statement, net of tax
Available-for-sale investments
transferred to - - -2 - -2
income statement, net of tax
Profit for the period - 53 53 -1 52
Balance at 30 1,067 5,010 6,847 16 6,863
September 2007
Condensed consolidated cash flow statement
EUR million Q1-Q3/ Q1-Q3/ Q1-Q4/
2007 2006 2006
Cash flow from operating activities
Profit for the period 52 143 338
Adjustments, total 1,096 935 1,195
Change in working -271 -71 21
capital
Cash generated from 877 1,007 1,554
operations
Finance costs, net -162 -120 -180
Income taxes paid -142 -87 -159
Net cash from 573 800 1,215
operating activities
Cash flow from investing activities
Acquisitions and -13 -50 -68
share purchases
Purchases of -520 -470 -635
intangible and
tangible assets
Asset sales and 186 329 389
other investing
cash flow
Net cash used in -347 -191 -314
investing activities
Cash flow from financing activities
Change in loans and 154 -320 -559
other financial items
Share options 104 - -
exercised
Dividends paid -392 -392 -392
Purchases of own -169 - -
shares
Net cash used in -303 -712 -951
financing activities
Change in cash and -77 -103 -50
cash equivalents
Cash and cash 199 251 251
equivalents at
beginning of period
Foreign exchange -1 -1 -2
effect on cash
Change in cash and -77 -103 -50
cash equivalents
Cash and cash 121 147 199
equivalents at end of period
Operating cash flow 1.09 1.53 2.32
per share, EUR
Quarterly information
EUR million Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2007 2007 2007 2006 2006 2006 2006
Sales by segment
Magazine Papers 847 798 793 905 861 817 771
Newsprint 365 379 348 380 360 351 345
Fine and Speciality 694 686 699 667 626 627 640
Papers
Label Materials 252 260 261 251 240 245 251
Wood Products 262 326 314 287 310 378 346
Other Operations 173 214 234 224 206 189 204
Internal sales -126 -126 -130 -131 -108 -123 -97
Sales, total 2,467 2,537 2,519 2,583 2,495 2,484 2,460
Operating profit by segment
Magazine Papers 34 -339 27 75 -62 -85 16
Newsprint 44 53 44 39 50 34 25
Fine and Speciality 29 39 32 44 50 -13 27
Papers
Label Materials 10 13 18 17 11 16 17
Wood Products -2 41 32 14 104 22 4
Other Operations 66 112 47 49 2 -36 55
Share of results of 14 6 21 9 18 8 26
associated companies and
joint ventures
Operating profit 195 -75 221 247 173 -54 170
(loss), total
% of sales 7.9 -3.0 8.8 9.6 6.9 -2.2 6.9
Gains on - - 2 -2 - - -
available-for-sale investments, net
Exchange rate and -9 8 3 4 -3 5 12
fair value gains and losses
Interest and other -42 -54 -49 -46 -41 -52 -46
finance costs, net
Profit (loss) 144 -121 177 203 129 -101 136
before tax
Income taxes -25 -77 -46 -8 18 -2 -37
Profit (loss) for 119 -198 131 195 147 -103 99
the period
Basic earnings per 0.23 -0.38 0.25 0.37 0.29 -0.20 0.19
share, EUR
Diluted earnings 0.23 -0.38 0.25 0.38 0.28 -0.20 0.19
per share, EUR
Average number of 527,012 527,111 523,261 523,258 523,256 523,256 523,108
shares basic (1,000)
Average number of 529,530 530,980 527,086 526,416 525,938 525,874 525,936
shares diluted (1,000)
Special items in operating profit
Special items in operating profit are specified in the divisional reviews on
pages 5-8.
Magazine Papers - -371 - 6 -126 -133 -
Newsprint - - - -2 - -5 -
Fine and Speciality - - - -3 -2 -36 -
Papers
Label Materials - - - - - - -
Wood Products - - - - 93 - -10
Other Operations - 71 - -6 -1 41 -5
Share of results of - - - - - - -
associated companies and
joint ventures
Special items in - -300 - -5 -36 -133 -15
operating profit, total
Special items after - - - 6 - - -
operating profit
Special items - -32 - 35 20 -29 -
reported in taxes (see page 3)
Special items, total - -332 - 36 -16 -162 -15
Operating profit, 195 225 221 252 209 79 185
excluding special items
% of sales 7.9 8.9 8.8 9.8 8.4 3.2 7.5
Profit before tax, 144 179 177 202 165 32 151
excluding special items
% of sales 5.8 7.1 7.0 7.8 6.6 1.3 6.1
Earnings per share, 0.23 0.28 0.25 0.30 0.25 0.04 0.21
excluding special items, EUR
Return on equity 6.9 8.5 7.3 8.7 7.2 1.1 6.1
excl. special items, %
Return of capital 6.8 8.3 7.9 8.7 7.1 2.7 6.4
empl. excl. special items, %
EUR million Q1-Q3/ Q1-Q3/ Q1-Q4/
2007 2006 2006
Sales by segment
Magazine Papers 2,438 2,449 3,354
Newsprint 1,092 1,056 1,436
Fine and Speciality 2,079 1,893 2,560
Papers
Label Materials 773 736 987
Wood Products 902 1,034 1,321
Other Operations 621 599 823
Internal sales -382 -328 -459
Sales, total 7,523 7,439 10,022
Operating profit by segment
Magazine Papers -278 -131 -56
Newsprint 141 109 148
Fine and Speciality 100 64 108
Papers
Label Materials 41 44 61
Wood Products 71 130 144
Other Operations 225 21 70
Share of results of 41 52 61
associated companies and
joint ventures
Operating profit 341 289 536
(loss), total
% of sales 4.5 3.9 5.3
Gains on 2 - -2
available-for-sale
investments, net
Exchange rate and 2 14 18
fair value gains and losses
Interest and other -145 -139 -185
finance costs, net
Profit (loss) 200 164 367
before tax
Income taxes -148 -21 -29
Profit (loss) for 52 143 338
the period
Basic earnings per 0.10 0.28 0.65
share, EUR
Diluted earnings 0.10 0.27 0.65
per share, EUR
Average number of 525,794 523,207 523,220
shares basic (1,000)
Average number of 529,198 525,916 526,041
shares diluted (1,000)
Special items in operating profit
Special items in operating profit are specified in the divisional reviews on
pages 5-8.
Magazine Papers -371 -259 -253
Newsprint - -5 -7
Fine and Speciality - -38 -41
Papers
Label Materials - - -
Wood Products - 83 83
Other Operations 71 35 29
Share of results of - - -
associated companies and
joint ventures
Special items in -300 -184 -189
operating profit,
total
Special items after - - 6
operating profit
Special items -32 -9 26
reported in taxes (see page 3)
Special items, total -332 -193 -157
Operating profit, 641 473 725
excluding special items
% of sales 8.5 6.4 7.2
Profit before tax, 500 348 550
excluding special items
% of sales 6.6 4.7 5.5
Earnings per share, 0.76 0.50 0.80
excluding special items, EUR
Return on equity 7.5 4.8 5.7
excl. special items, %
Return of capital 7.6 5.4 6.2
empl. excl. special items, %
Changes in property, plant and equipment
EUR million Q1-Q3/ Q1-Q3/ Q1-Q4/
2007 2006 2006
Book value at 6,500 7,316 7,316
beginning of period
Capital expenditure 503 442 604
Decreases -84 -254 -325
Depreciation -567 -617 -804
Impairment charges -22 -243 -243
Impairment reversal 11 - -
Translation -65 -49 -48
difference and other changes
Book value at end 6,276 6,595 6,500
of period
Commitments and contingencies
EUR million 30.09.07 30.09.06 31.12.06
Own commitments
Mortgages 91 91 92
On behalf of associated companies and joint ventures
Guarantees for loans 10 12 12
On behalf of others
Guarantees for loans - 2 1
Other guarantees 3 6 5
Other own commitments
Leasing commitments 18 19 23
for the next 12 months
Leasing commitments 89 109 94
for subsequent periods
Other commitments 74 70 69
Capital commitments
EUR million Completion Total cost By 31.12. Q1-Q3/ After
2006 2007 30.09.07
Pulp mill rebuild, June 2008 325 25 169 131
Kymi
New bioboiler, Sept. 2009 84 - 7 77
Caledonian
New Poland mill, Nov. 2008 90 - 10 80
UPM Raflatac
PM5 quality upgrade, June 2008 38 - 6 32
Jämsänkoski
New USA mill, March 2008 75 8 39 28
UPM Raflatac, Dixon
Notional amounts of derivative financial instruments
EUR million 30.09.07 30.09.06 31.12.06
Currency derivatives
Forward contracts 4,006 4,388 4,293
Options, bought 42 30 20
Options, written 47 35 10
Swaps 548 576 570
Interest rate derivatives
Forward contracts 4,523 3,066 2,500
Swaps 2,504 2,643 2,566
Other derivatives
Forward contracts 13 33 13
Swaps 4 20 16
Related party (associated companies and joint ventures) transactions and
balances
EUR million Q1-Q3/ Q1-Q3/ Q1-Q4/
2007 2006 2006
Sales to associated 91 41 61
companies
Purchases from 356 334 448
associated companies
Non-current receivables - 4 -
at end of period
Trade and other 16 16 20
receivables at end of period
Trade and other 27 35 23
payables at end of period
Key exchange rates for the euro at end of period
30.9.2007 30.6.2007 31.3.2007 31.12.2006 30.9.2006
USD 1.4179 1.3505 1.3318 1.3170 1.2660
CAD 1.4122 1.4245 1.5366 1.5281 1.4136
JPY 163.55 166.63 157.32 156.93 149.34
GBP 0.6968 0.6740 0.6798 0.6715 0.6777
SEK 9.2147 9.2525 9.3462 9.0404 9.2797
30.6.2006 31.3.2006
USD 1.2713 1.2104
CAD 1.4132 1.4084
JPY 145.75 142.42
GBP 0.6921 0.6964
SEK 9.2385 9.4315
Basis of preparation
This unaudited financial report has been prepared in accordance with the
accounting policies set out in International Accounting Standard 34 on Interim
Financial Reporting and in the Group's Consolidated Financial Statements for
2006. Income tax expense is recognised based on the best estimate of the
weighted average annual income tax rate expected for the full financial year.
The Group has adopted the following standard:
IFRS 7 Financial Instruments: Disclosures, and a complementary amendment to IAS
1 Presentation of Financial Statements - Capital Disclosures, effective for
annual periods beginning on or after 1 January 2007. IFRS 7 introduces new
disclosures to improve the information about financial instruments. The
amendment to IAS 1 introduces disclosures about how an entity manages its
capital. Adoption of IFRS 7 and the amendment to IAS 1 will expand disclosures
presented in the annual financial statements.
Calculation of key indicators
Return on equity, %:
(Profit before tax - income taxes)
divided by
Shareholders' equity (average)
times 100
Return on capital employed, %:
(Profit before tax + interest expenses and other financial expenses)
divided by
(Balance sheet total - non-interest-bearing liabilities (average))
times 100
Earnings per share:
Profit for the period attributable to equity holders of parent company
divided by
Adjusted average number of shares during the period excluding own shares
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. For more detailed information about risk
factors, see pages 15-17 of the company's annual report 2006.
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Corporate Communications
DISTRIBUTION
OMX Nordic Exchange Helsinki
New York Stock Exchange
Main media
www.upm-kymmene.com
