UPM H1 2018 financial report: Commercial success drives growth in sales and earnings

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UPM/Fordaq
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Q2 2018 and H1 2018 were a success for UPM, according the company's financial report for the period.

Thus, in Q2 2018, UPM's sales grew by 5% to EUR 2,589 million (2,464 million in Q2 2017). The company's comparable EBIT increased by 24% to EUR 334 million (270 million). Sales prices increased in all business areas, outweighing the impact of higher input costs and unfavourable currency exchange rates. However, UPM's Q2 operating profit was held back by several significant scheduled maintenance shutdowns — total impact was EUR -90 million. Operating cash flow was EUR 329 million (269 million).

As to H1 2018, during the period the company's comparable EBIT increased by 20% to EUR 689 million (575 million in H1 2017). Sales prices increased in all business areas as during Q2 2018. Also, in H1 2018, delivery volumes were held back by several significant maintenance shutdowns in Q2 and weather-related wood harvesting limitations in Q1. During the same period UPM paid a dividend of EUR 613 million. The company's net debt decreased to EUR 401 million (1,046 million).

Moreover, in Q2 2018 UPM completed the UPM Kaukas pulp mill expansion and in H1 2018 UPM announced focused investments in Germany, Finland and China to grow in the attractive release liner segments.

Jussi Pesonen, President and CEO, commented on Q2 results:

"UPM delivered yet another successful quarter of earnings growth. Customer demand for our products continued to be strong and we succeeded in increasing prices in most of our businesses also during the quarter. This enabled us to expand our margins and recover the impact of clearly higher input costs.

We carried out several significant scheduled maintenance shutdowns during the quarter, which held back our operating profit by approximately EUR 90 million. However, earlier challenges in wood harvesting and logistics were solved and no longer impacted our performance".

As to forecast for 2018, UPM's comparable EBIT is expected to continue growing in 2018 compared with 2017. H2 2018 comparable EBIT is expected to be significantly higher compared with H1 2018.

The fundamentals for UPM businesses in 2018 are favourable. Sales price increases in 2018 are expected to outweigh the increase in variable cost, compared with 2017.

H1 2018 results were impacted by four significant maintenance shutdowns and weather-related wood harvesting limitations. H2 2018 is scheduled to have one significant maintenance shutdown.

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