Q1 2021 highlights
• Sales decreased by 2% to EUR 2,234 million (2,287 million in Q1 2020) mainly due to lower prices of graphic papers and unfavourable changes in currencies
• Comparable EBIT was EUR 279 million, 12.5% of sales (279 million, 12.2%), in line with last year
• Pulp demand continued to be good and pulp prices increased rapidly. Strong markets continued for labelling materials, specialty papers and energy
• Following the timely actions taken in H2 2020 costs were competitive and asset utilisation good
• Operating cash flow increased to EUR 217 million (137 million)
• Strong financial position continues. Net debt was EUR 83 million (-405) and cash funds and unused committed credit facilities totalled EUR 3.2 billion at the end of Q1 2021
• UPM issued a EUR 500 million Green Bond under the EMTN programme in March
• Transformative growth projects proceed on budget and on schedule
• UPM started the basic engineering phase of a next-generation biofuels refinery in January
• UPM joined The Climate Pledge in February, committed to reach the targets of the Paris Agreement 10 years in advance
Jussi Pesonen, President and CEO, comments on the Q1 results:
“UPM entered the year well prepared for the turn in the markets, which is also evident in our first quarter results. We took timely actions last year, and now that the world economy is recovering, there is a good momentum going forward.
The year began with good demand for almost all UPM products. Pulp prices increased rapidly, while UPM Raflatac, UPM Specialty Papers and UPM Energy continued to perform strongly. In addition, UPM Communications Papers achieved satisfactory results in the difficult market environment. Our earnings recovered to pre-pandemic levels, and our transformative growth projects continued on schedule and on budget. All in all, a good start to the year.
Our sales decreased by 2% to EUR 2,234 million, and comparable EBIT reached EUR 279 million, in line with the corresponding quarter of last year and higher than the three preceding quarters. Operating cash flow increased to EUR 217 million. Our financial position remains strong with a net debt of EUR 83 million and cash funds and unused committed credit facilities totalling EUR 3.2 billion at the end of Q1 2021.
The biggest improvement in earnings came from UPM Biorefining. Demand for pulp, timber and biofuels was good and pulp prices increased faster than expected. At the same time, strong markets continued for labelling materials and specialty papers. Demand trends in consumer behaviour, e-commerce and retail, accelerated by the pandemic, carried UPM Raflatac and UPM Specialty Papers to excellent results again. For UPM Raflatac, the quarter was its best-ever.
Demand and pricing for communication papers decreased from the comparison periods, as expected. Despite difficult market conditions UPM Communication Papers achieved a clearly positive comparable EBIT due to efficient operations, satisfactory asset utilisation rates and commercial success. This would not have been possible without the timely measures taken last year.
Profitability of UPM Energy continued on an excellent level. Electricity sales prices were clearly higher than on comparison periods, and UPM succeeded in optimising the use of its assets in volatile markets. Hydropower generation decreased but was on a good level.
UPM Plywood delivered steady results. Demand continued to be good in construction end uses, and started to improve in industrial end uses, such as panel trading and vehicle flooring.”
more at: https://www.upm.com/about-us/for-media/releases/2021/04/upm-interim-report-q1-2021-market-turn-and-efficiency-improvement-boost-upms-earnings–growth-projects-progress-as-planned/