UPM-Kymmene Corporation Stock Exchange Release (Interim Report) 25 October 2022 at
UPM Interim Report Q3 2022:
UPM delivers all-time high quarterly results with excellent performance in all businesses
Q3 highlights
- Sales increased by 36% to
EUR 3,420 million (2,523 million in Q3 2021) - Comparable EBIT grew by 84% to
EUR 779 million , 22.8% of sales (424 million, 16.8%) - Operating cash flow was
EUR -201 million (318 million), impacted by cash flow from energy hedges. Other operating cash flows were largely as expected - The rise in energy futures prices continued, causing short-term cash outflow impact from energy hedges. Respectively, it indicates the 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 5.2 billion at the end of Q3 2022. UPM signedEUR 4.3 billion of credit facilities during Q3 - In August,
EcoVadis recognised UPM on Platinum level based on the company’s sustainability performance - In September,
UPM Raflatac completed the acquisition ofAMC AG - In October, the new deep sea pulp terminal in the port of
Montevideo inUruguay was inaugurated
Q1–Q3 highlights
- Sales increased by 19% to
EUR 8,489 million (7,141 million in Q1–Q3 2021) - Comparable EBIT increased by 43% to
EUR 1,443 million (1,010 million), and was 17.0% (14.1%) of sales - Operating cash flow was
EUR -1,068 million (844 million), impacted by cash flows from energy hedges in the highly exceptional energy markets - Net debt increased to
EUR 3,133 million (667 million) and the net debt to EBITDA ratio was 1.39 (0.38). 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 , the purchasing of wood inRussia and the UPM Chudovo plywood mill operations - The strike in
Finland affected production and delivery volumes in the early part of the year. Estimated full-year earnings impact is not material - In April, UPM and the Paperworkers’ Union agreed on the first-ever business-specific collective labour agreements
- In June, UPM announced the sale of the Steyrermühl site in
Austria to secure competitiveness and adapt newsprint production to long-term market development
Key figures
Q3/2022 | Q3/2021 | Q2/2022 | Q1–Q3/2022 | Q1–Q3/2021 | Q1–Q4/2021 | |
Sales, EURm | 3,420 | 2,523 | 2,562 | 8,489 | 7,141 | 9,814 |
Comparable EBITDA, EURm | 894 | 535 | 506 | 1,777 | 1,351 | 1,821 |
% of sales | 26.1 | 21.2 | 19.7 | 20.9 | 18.9 | 18.6 |
Operating profit, EURm | 781 | 564 | 335 | 1,299 | 1,147 | 1,562 |
Comparable EBIT, EURm | 779 | 424 | 387 | 1,443 | 1,010 | 1,471 |
% of sales | 22.8 | 16.8 | 15.1 | 17.0 | 14.1 | 15.0 |
Profit before tax, EURm | 766 | 558 | 361 | 1,306 | 1,128 | 1,548 |
Comparable profit before tax, EURm | 764 | 418 | 413 | 1,449 | 991 | 1,457 |
Profit for the period, EURm | 622 | 497 | 292 | 1,053 | 968 | 1,307 |
Comparable profit for the period, EURm | 629 | 359 | 329 | 1,190 | 832 | 1,204 |
Earnings per share (EPS), EUR | 1.15 | 0.92 | 0.53 | 1.93 | 1.78 | 2.41 |
Comparable EPS, EUR | 1.16 | 0.66 | 0.60 | 2.18 | 1.53 | 2.22 |
Return on equity (ROE), % | 21.1 | 19.9 | 10.5 | 12.0 | 12.9 | 12.7 |
Comparable ROE, % | 21.3 | 14.3 | 11.8 | 13.6 | 11.1 | 11.7 |
Return on capital employed (ROCE), % | 18.7 | 17.9 | 10.0 | 11.4 | 12.5 | 12.4 |
Comparable ROCE, % | 18.6 | 13.4 | 11.5 | 12.6 | 11.0 | 11.7 |
Operating cash flow, EURm | -201 | 318 | -879 | -1,068 | 844 | 1,250 |
Operating cash flow per share, EUR | -0.38 | 0.60 | -1.65 | -2.00 | 1.58 | 2.34 |
Equity per share at the end of period, EUR | 22.35 | 19.08 | 20.57 | 22.35 | 19.08 | 20.34 |
Capital employed at the end of period, EURm | 18,052 | 13,039 | 15,637 | 18,052 | 13,039 | 13,759 |
Net debt at the end of period, EURm | 3,133 | 667 | 2,688 | 3,133 | 667 | 647 |
Net debt to EBITDA (last 12 months) | 1.39 | 0.38 | 1.42 | 1.39 | 0.38 | 0.35 |
Personnel at the end of period | 17,289 | 17,085 | 17,601 | 17,289 | 17,085 | 16,966 |
“UPM reached all-time high quarterly results in Q3. The strength of our operating model was on full display as we simultaneously delivered record quarterly results in UPM Communication Papers, UPM Specialty Papers,
Good demand continued in most of our businesses, and sales prices more than offset the impact of continued increases in variable costs. Delivery volumes were back to normal after the exceptional H1 and operational efficiency was on a good level. No major downside risks materialised during the quarter.
Our sales grew by 36% to
Our financial position remains strong, with cash funds and unused committed credit facilities totalling
The quarter was clearly characterised by the energy crisis in
UPM Energy achieved record earnings, benefiting from high market prices, optimised hydropower generation on the volatile markets, and the first notable generation volumes from the OL3 nuclear power plant unit.
UPM Fibres achieved an excellent quarterly result with continued solid demand and high prices for pulp. Our timber business, however, was affected by a visible slowdown in construction end-uses.
In UPM Communication Papers the excellent earnings level is a remarkable achievement. The business has faced a radical rise in input costs, particularly in energy and fibres, but they have been successfully offset by sales prices. The business has been very determined in adopting a more agile operating mode in the highly uncertain markets.
UPM Specialty Papers delivered all-time high quarterly results despite historically high-priced raw materials. The market for release liners and packaging papers remained strong. Asian fine paper markets continued to be challenging.
Favourable market conditions continued for
UPM Plywood had a good quarter despite slowing demand in construction end-uses. Sales prices increased for most products.
In Other operations, UPM Biofuels achieved record production and profitability in the strong markets for renewable biofuels. Our strategy based on proprietary technology and UPM’s integrated feedstocks, supplying highly sustainable renewable fuels is truly delivering results.
Our pulp mill in Paso de los Toros,
The testing period for the OL3 nuclear power plant unit continues. Once in commercial production, it will grow our energy business by almost 50%, providing much-needed emission-free electricity to the markets.
Our biochemicals refinery project in
During the quarter, UPM received its all-time high score from
Looking ahead, the uncertainties in the business environment continue to be numerous, but UPM is well prepared to face them with high-performing businesses, an agile operating model and a strong balance sheet. In addition, our growth projects are nearing their start up phases, adding significant new earnings in the future. This year, we expect our annual earnings to reach new record highs.”
Outlook for 2022
UPM’s comparable EBIT is expected to increase in 2022 from 2021. Following the record strong Q3 2022 results, UPM’s financial performance is expected to continue above last year’s level.
Significant uncertainties remain in the outlook, related to the war in
Sales prices and variable costs are expected to be higher in H2 2022 than in H1 2022 in most of UPM businesses. UPM will continue to manage margins with product pricing, by optimising its product and market mix, through efficient use of assets as well as by taking measures to improve variable and fixed cost efficiency.
Invitation to UPM’s webcast and press conference on Q3 2022 Interim Report
A webcast and a conference call for analysts and investors in English language begins at
Conference call title: UPM Interim Report for January–September 2022
International telephone numbers:
Dial in number(s):
Brüssel: +32 (0) 2 789 8603
No PIN is needed for participation in the teleconference. The caller must inform the teleoperator that she/he wants to join the UPM Q3 2022 Interim report teleconference and announce her/his name and the company she/he represents. We recommend that participants dial in 5–10 minutes prior to ensure a timely start of the webcast. The webcast will be available at www.upm.com for 12 months after the call.
Later in the afternoon, at
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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, 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 pages 165–166 of the Annual Report 2021. Risks and opportunities are discussed on pages 34–35, and risks and risk management are presented on pages 131–135.
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Executive Vice President, Stakeholder Relations
UPM, Media Relations
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tel. +358 40 588 3284
media@upm.com
UPM
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Attachment
- UPM-Interim-Report-Q3-2022-en
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