HELSINKI, April 24, 2025 /PRNewswire/ -- UPM-Kymmene Corporation Stock Exchange Release (Interim report) April 24, 2025 at 09:50 EEST
UPM Interim Report Q1 2025: Good start to the year with actions to sharpen competitiveness
Q1 2025 highlights
Sales totaled €2,646 million (2,640 million in Q1 2024)
Comparable EBIT decreased by 14% to €287 million, 10.8% of sales (333 million, 12.6%)
Operating cash flow was €289 million (335 million)
Gradually improving markets in pulp and advanced materials
Actions to sharpen competitiveness started to bear fruit
UPM acquired Metamark, a UK-based company, to accelerate UPM Raflatac's growth
UPM Communication Papers announced a plan to reduce paper capacity in Germany and streamline its structure
UPM commenced a share buy-back program and repurchased 6 million shares for a total of approximately €160 million
UPM was listed as the only forest and paper industry company in the Dow Jones Global and European Sustainability Indices (DJSI) for the years 2024-2025
UPM was recognized among the top sustainability performers by CDP and S&P Global
Key figures
Q1/2025
Q1/2024
Q4/2024
Q1-Q4/2024
Sales, € million
2,646
2,640
2,632
10,339
Comparable EBITDA, € million
421
489
436
1,734
% of sales
15.9
18.5
16.5
16.8
Operating profit (loss), € million
198
354
-105
604
Comparable EBIT, € million
287
333
418
1,224
% of sales
10.8
12.6
15.9
11.8
Profit (loss) before tax, € million
173
332
-131
500
Comparable profit before tax, € million
262
311
392
1,123
Profit (loss) for the period, € million
143
279
-95
463
Comparable profit for the period, € million
223
258
328
953
Earnings per share (EPS), €
0.26
0.51
-0.19
0.82
Comparable EPS, €
0.41
0.47
0.61
1.74
Return on equity (ROE), %
5.2
9.6
-3.4
4.0
Comparable ROE, %
8.1
8.9
11.5
8.3
Return on capital employed (ROCE), %
5.5
9.6
-2.6
4.1
Comparable ROCE, %
7.9
9.1
11.1
8.2
Operating cash flow, € million
289
335
570
1,352
Operating cash flow per share, €
0.54
0.63
1.07
2.54
Equity per share at the end of period, €
19.29
21.42
20.89
20.89
Capital employed at the end of period, € million
14,449
15,028
15,452
15,452
Net debt at the end of period, € million
2,954
2,312
2,869
2,869
Net debt to EBITDA (last 12 months)
1.77
1.46
1.66
1.66
Personnel at the end of period .
15,890
16,132
15,827
15,827
UPM presents certain measures of performance, financial position and cash flows, which are alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definitions of alternative performance measures are presented in » UPM Annual Report 2024
Massimo Reynaudo, President and CEO, comments on the results:
"We had a good start to the year and improved performance compared to the previous quarter. Markets were gradually recovering in pulp and advanced materials, while our actions to sharpen competitiveness started to bear fruit in several businesses. We made progress towards our growth ambition with the acquisition of Metamark, and we completed our first share buy-back program by early April.
In Q1, our sales were €2,646 million, broadly in line with the preceding quarter as well as with Q1 2024. Comparable EBIT was €287 million, down 14% from last year's corresponding quarter. Operating cash flow was €289 million. Our financial position continues to be solid, with net debt to EBITDA ratio of 1.77 at the end of March.
UPM Fibres delivered solid results. In Uruguay, our pulp production and logistics infrastructure are now fully operational, driving production costs lower. In Finland, despite the unsustainably high wood prices we continued to operate profitably thanks to our new operating model and efficient mills. Average pulp prices were cyclically low, although market prices increased slightly during the quarter.
In advanced materials, markets for self-adhesive label materials continued to grow moderately. UPM Raflatac captured its share of the growth, and the efficiency measures started to bear fruit. UPM Specialty Papers showed robust performance and benefited from lower production costs. UPM Plywood delivered steady results.
In decarbonization solutions, the market conditions continued to be challenging. In UPM Energy, the high season of the electricity market was muted by the mild winter and high hydro reservoirs in the Nordic countries. UPM Biofuels took a step towards restoring profitability with solid deliveries and decreased variable costs.
In UPM Biochemicals, the sequential start-up of the Leuna biorefinery continued and we expect to start the integrated commercial production in H2 2025. Commercial interest in the products and side streams is confirmed with an opportunity pipeline multiple times the annual capacity of the refinery.
In UPM Communication Papers performance was steady, deliveries and prices were down sequentially. We continued to safeguard our future performance with new efficiency measures and the planned closure of UPM Ettringen paper mill in Germany, which would reduce the annual capacity of uncoated mechanical paper by 270,000 tonnes during July 2025.
Towards the end of Q1, the uncertainty of the business environment increased significantly due to the escalating global trade tensions. We expect the direct impact of tariffs on our businesses to be relatively limited and the tariffs in general to be broadly passed through to prices. However, the uncertainty related to tariffs may impact trade flows, cause hesitation among customers, disrupt supply chains and weaken consumer confidence in the coming months. Furthermore, the scale of the trade conflict may cause currency fluctuations, which would have a direct impact on us.
With our solid balance sheet, competitive portfolio and broad geographic presence we are well positioned to face the uncertainty. Since last fall, we have been implementing efficiency and margin management measures that continue to strengthen our competitive position and prepare us to face what lies ahead.
In this uncertain environment, we remain focused on improving our competitiveness, pursuing long-term growth and developing a portfolio of world-class businesses.
Our commitment to sustainability also remains intact. In Q1, we were listed as the only forest and paper industry company in the Dow Jones Global and European Sustainability Indices (DJSI) for the years 2024-2025. We were also recognized among the top performers by the CDP, a global non-profit that runs the world's only independent disclosure system for managing environmental impacts."
Profit guidance
UPM's comparable EBIT in H1 2025 is expected to be approximately in the range of €400-625 million (€515 million in H1 2024).
Outlook
UPM's performance in H1 2025 is expected to benefit from higher delivery volumes and lower fixed costs, but be held back by lower sales margins, compared with H1 2024. The year 2025 has started with lower pulp and electricity prices than 2024.
2025 will be the first year of full production at the UPM Paso de los Toros mill, which is expected to grow pulp deliveries. Deliveries are expected to continue to increase for labeling materials, specialty papers and plywood. Communication paper deliveries are expected to decrease.
UPM Biofuels is expected to improve its performance in H1 2025, compared with H1 2024.
UPM's operations in Q2 2025 will be impacted by significantly higher maintenance activity than in Q1 2025.
There are significant uncertainties in geopolitics and global trade relations, which may impact the development of UPM's product deliveries, sales prices, various input cost factors and currency exchange rates.
Sensitivity to pulp and electricity prices
UPM's comparable EBIT is sensitive to pulp and electricity prices. The figures below represent group earnings sensitivities on annual level.
UPM is a large producer and consumer of chemical pulp. A €50/tonne change in average pulp price would impact annual comparable EBIT by approximately €170 million (net impact: assuming no correlation between pulp and paper prices) to approximately €270 million (gross impact: assuming paper pricing would match changes in pulp costs).
UPM is a large producer and consumer of electricity in Finland and separately hedges part of its electricity sales and purchases. Based on UPM's estimated unhedged net electricity sales position in Finland in 2025, a €10/MWh change in average electricity market price in Finland would impact annual comparable EBIT by approximately €30 million.
Foreign exchange exposure
Fluctuations in monetary policies and economic conditions can significantly impact the value of various currencies, which in turn may affect UPM. Additionally, the escalation of global trade tensions could influence currency exchange rates. These currency fluctuations could impact UPM's cash flow, earnings, or balance sheet, and may also affect the relative competitiveness between different currency regions.
The group's policy is to hedge an average of 50% of its estimated net currency cash flows on a rolling basis over the next 12-month period. At the end of Q1 2025, UPM's estimated net currency cash flows for the next 12 months totaled approximately €1.6 billion. USD was the largest exposure at approximately €1.2 billion, followed by UYU, GBP and CNY. In addition, the earnings of UPM's foreign subsidiaries are translated to euros in reporting. UPM has significant foreign subsidiaries in Uruguay, the U.S. and China. Foreign exchange risks are discussed in UPM's Annual Report 2024 on pages 305-306.
Invitation to UPM's webcast on Q1 2025 Interim Report
A webcast and a conference call for analysts and investors will start at 13:15 EEST. The Interim Report will be presented in English by President and CEO Massimo Reynaudo and CFO Tapio Korpeinen. Participants can follow the webcast online via this link.
Participants wishing to ask questions after the presentation must register for the conference call. To participate in the conference call, please register here. After registering, you will be provided with telephone numbers, a user ID and a conference ID to access the call. To ask a question, press *5 on your telephone keypad to join the queue.
The webcast will be available at www.upm.com for 12 months after the call.
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 271-272 of the Annual Report 2024. Risks and opportunities are discussed on pages 33-35, and risks and risk management are presented on pages 120-124.
UPM, Media relations Mon-Fri 9:00-16:00 EEST tel. +358 40 588 3284 media@upm.com
UPM
UPM is a material solutions company, renewing products and entire value chains with an extensive portfolio of renewable fibres, advanced materials, decarbonization solutions, and communication papers. Our performance in sustainability has been recognized by third parties, including EcoVadis and the Dow Jones Sustainability Indices. We operate globally and employ approximately 15,800 people worldwide, with annual sales of approximately €10.3 billion. Our shares are listed on Nasdaq Helsinki Ltd.
