UPM Half-Year Financial Report 2022: UPM delivers record Q2 earnings with successful margin management in exceptional business environment

Q2 2022 highlights
*Sales increased by 7% to EUR 2,562 million (2,384 million in Q2 2021)
*Comparable EBIT grew by 26% to EUR 387 million, 15.1% of sales (307 million, 12.9%)
*Operating cash flow was EUR -879 million (308 million), impacted by cash flows from energy hedges. Other operating cash flows were largely as expected
*The rise in energy futures prices was unprecedented, as was the related short-term cash flow impact from energy hedges. Respectively, it indicates strong earnings potential of UPM Energy
*Sales prices increased in all business areas and more than offset the negative impact of higher variable costs
*Cash funds and unused committed credit facilities totalled EUR 1.5 billion at the end of Q2 2022
*Transformative growth projects in Uruguay and in Germany proceed well
*In May, UPM announced the acquisition of AMC AG to accelerate growth and enter new product segments in UPM Raflatac
*In June, UPM announced the sale of the Steyrermühl site in Austria to secure competitiveness and adapt newsprint production to the long-term market development

H1 2022 highlights
*Sales increased by 10% to EUR 5,069 million (4,618 million in H1 2021)
*Comparable EBIT increased by 13% to EUR 664 million (586 million), and was 13.1% (12.7%) of sales
*Operating cash flow was EUR -867 million (526 million), impacted by cash flows from energy hedges in the highly exceptional energy markets
*Net debt increased to EUR 2,688 million (750 million) and net debt to EBITDA ratio was 1.42 (0.49). A significant part of the increase in net debt is temporary, due to the cash flow impacts of energy hedges and future energy generation
*UPM decided to suspend its deliveries to Russia, purchasing of wood in Russia and the UPM Chudovo plywood mill operations
*The strike in Finland affected production and delivery volumes especially in the pulp, paper and biofuels businesses. Estimated full-year earnings impact is not material
*In April, UPM and Paperworkers’ Union agreed on first-ever business-specific collective labour agreements and the strike ended at UPM mills in Finland

Jussi Pesonen, President and CEO, comments on the Q2 results:
“UPM delivered record Q2 earnings driven by successful margin management in exceptionally tight markets for our products. All our businesses reported strong earnings amidst a volatile environment of rapid inflation in input costs and challenging supply and logistics chains. In addition, customer deliveries from our Finnish mills started smoothly after the end of the strike in late April. As a result, our quarterly sales increased by 7% to EUR 2,562 million, and comparable EBIT increased by 26% to EUR 387 million. This was a great achievement taking into account that during the first half we only had one month of normal full production. For the full year, we expect to reach a new record of annual earnings.

Operating cash flow was EUR -879 million and our net debt at the end of the quarter was EUR 2,688 million. Cash flow was significantly impacted by the timing of cash flows from our energy hedges during an unprecedented rise in energy futures prices. Due to the nature of our hedging activity, this cash flow is expected to reverse in the future, meaning that a significant part of the increase in net debt is temporary. Our financial position remains strong, with cash funds and unused committed credit facilities totalling EUR 1.5 billion at the end of Q2. We further improved our liquidity in July, with two new credit facilities totalling EUR 500 million. This gives us a solid base to push on with ongoing transformative growth investments and face the unpredictability of the operating environment.

Market fundamentals for UPM Fibres were strong in Q2, for both pulp and timber. Production at the Finnish pulp mills started well after the business specific collective labour agreements were signed in April and two major maintenance shutdowns were completed.

UPM Communication Papers had a strong quarter. Demand for graphic papers was good and price increases exceeded the rise in input costs, with the cost of energy posing a particular challenge. During the quarter we announced the sale of UPM Steyrermühl, in Austria. This is another step in securing competitiveness of the Communication Papers business, adjusting our newsprint production to the long-term market development. Newsprint production at the mill will stop at the end of next year.
details at: https://www.upm.com/about-us/for-media/releases/2022/07/upm-half-year-financial-report-2022-upm-delivers-record-q2-earnings-with-successful-margin-management-in-exceptional-business-environment/

Related Posts

International Paper Contributes $1 Million to Assist Hurricane Harvey Relief Efforts

International Paper has pledged $1 million to support disaster relief efforts in the communities impacted by Hurricane Harvey and Tropical Storm Harvey. The International Paper Foundation will contribute $750,000 to the American Red Cross chapters in Texas and Louisiana, and will contribute $250,000 to Feeding America. International Paper has established strategic partnerships with these organizations to provide disaster relief in communities where IP employees live and work. Click Read More below for additional detail.

Mohawk Introduces A Maker’s Field Guide to Envelopes

Mohawk, North America’s largest privately-owned manufacturer of fine papers, envelopes and specialty materials for commercial and digital printing is proud to announce the release of A Maker’s Field Guide to Envelopes, the latest in a series of comprehensive, printed guides designed to inspire and educate designers, their clients and printers on the importance of choosing the right materials for print. “The new Maker’s Field Guide to Envelopes is the latest expression of Mohawk’s ongoing commitment to helping demonstrate the pivotal role materials play in the success of every print job,” said Chris Harrold, Vice President, Creative Director, Mohawk. “Envelopes are equal part function and first impression. An envelope is like a handshake that simultaneously says ‘hello’ and ‘open me first!’” A Maker’s Field Guide to Envelopes was created by Aurora Design to complement Mohawk’s Maker’s Field Guide to Texture and Color and the Mohawk Maker Quarterly, an award-winning publication which highlights the beauty and tactility of fine paper. Both publications have become go-to resources for makers and creatives worldwide as print is rediscovered as a powerful alternative to digital communication. Click Read More below for additional detail.

Stora Enso initiates a plan to permanently close down pulp and paper production at Kvarnsveden and Veitsiluoto mills

Stora Enso will start co-determination negotiations with employees at its Kvarnsveden Mill in Sweden and Veitsiluoto Mill in Finland regarding a plan to permanently close down pulp and paper production at both mills. The planned closures would take place during the third quarter of 2021, and affect directly 670 people in Finland and 440 people in Sweden. Paper demand in Europe has declined for over a decade. This trend has further accelerated due to the pandemic, which has led to changes in consumer behaviour. As a consequence, there is a significant overcapacity in the European paper market, which has resulted in historically low price levels and challenged the cost-competitiveness of many paper mills. Both Kvarnsveden and Veitsiluoto mills are loss-making, and their profitability is expected to remain unsatisfactory also going forward. No decisions regarding the planned closures nor employee impact will be taken until the local co-determination negotiations have been concluded.
Back To Top
×Close search
Search