Interim report Q3/2016: Performance improvement continued into second half of 2016 - excellent, seasonally strong Q3
(Thomson Reuters ONE) -
UPM-Kymmene Corporation Stock Exchange Release 25 October 2016 at
9:30 EET
Interim report Q3/2016:
Performance improvement continued into second half of 2016 - excellent,
seasonally strong Q3
Q3 2016 highlights
* Comparable EBIT increased by 31% to EUR 314 million (240 million).
* Growth projects contributed significantly to earnings, driving delivery
growth in UPM Biorefining, UPM Raflatac and UPM Specialty Papers.
* UPM Paper ENA results were seasonally strong, with high operational
efficiency and exceptionally low fixed costs.
* Cost-efficiency measures continued on a strong track.
* Record strong operating cash flow at EUR 506 million (363 million).
Q1-Q3 2016 highlights
* Comparable EBIT increased by 28% to EUR 859 million (669 million).
* Operating cash flow increased to EUR 1,281 million (795 million).
* Net debt decreased to EUR 1,479 million (2,465 million) and gearing to 19%
(31%).
* UPM sold the Schwedt newsprint mill in Germany in July.
* In July, UPM announced expansion of the UPM Kymi pulp mill capacity to
870,000 tonnes.
* In October, UPM announced a new self-adhesive label stock investment in
Poland to meet the growing demand in Europe.
Key figures Q3/2016 Q3/2015 Q2/2016 Q1-Q3/2016 Q1-Q3/2015 Q1-Q4/2015
Sales, EURm 2,445 2,530 2,445 7,336 7,564 10,138
Comparable EBITDA,
EURm 423 345 385 1,210 987 1,350
% of sales 17.3 13.6 15.8 16.5 13.0 13.3
Operating profit,
EURm 364 513 262 903 922 1,142
Comparable EBIT, EURm 314 240 264 859 669 916
% of sales 12.8 9.5 10.8 11.7 8.8 9.0
Profit before tax,
EURm 336 498 250 848 861 1,075
Comparable profit
before tax, EURm 288 225 252 807 608 849
Profit for the
period, EURm 268 408 198 693 723 916
Comparable profit for
the period, EURm 234 189 200 659 519 734
Earnings per share
(EPS), EUR 0.50 0.77 0.37 1.30 1.36 1.72
Comparable EPS, EUR 0.44 0.35 0.37 1.23 0.97 1.38
Return on equity
(ROE), % 13.8 21.0 10.1 11.7 12.5 11.9
Comparable ROE, % 12.1 9.7 10.2 11.1 9.0 9.5
Return on capital
employed (ROCE), % 13.4 18.4 9.9 11.0 10.9 10.3
Comparable ROCE, % 11.5 8.6 10.0 10.5 7.9 8.3
Operating cash flow,
EURm 506 363 434 1,281 795 1,185
Operating cash flow
per share, EUR 0.95 0.68 0.81 2.40 1.49 2.22
Equity per share at
end of period, EUR 14.75 14.89 14.36 14.75 14.89 14.89
Capital employed at
the end of period,
EURm 10,463 11,148 10,403 10,463 11,148 11,010
Net interest-bearing
liabilities at end of
period, EURm 1,479 2,465 1,876 1,479 2,465 2,100
Gearing ratio at end
of period, % 19 31 24 19 31 26
Personnel at the end
of period 19,559 19,874 20,711 19,559 19,874 19,578
Jussi Pesonen, President and CEO, comments on the Q3 result:
"UPM's performance in the third quarter was excellent and demonstrated the
strength of our business model. Our growth projects and cost-efficiency measures
continued to deliver. UPM Paper ENA was particularly successful in this
seasonally strong quarter. Our comparable EBIT increased by 31% and our
operating cash flow reached record-strong EUR 506 million. Furthermore, our net
debt was EUR 986 million lower than a year ago.
UPM Paper ENA's performance shows that value can also be created in a
challenging business environment. Successful commercial strategy, continued
strict cost management and optimal use of assets deliver results. This was
particularly visible in the seasonally strong third quarter, as operational
efficiency was on a high level and fixed costs very low.
Going forward, we expect the structural decline in demand of graphic papers in
Europe to continue as in the recent years. Therefore we are in the process of
conducting a review of our European graphic paper assets. Any potential
restructuring plans would be announced in the near future.
Our growth investments continued to gather pace, and contributed significantly
to the earnings growth. On top of the pulp and self-adhesive label investments,
the Lappeenranta biorefinery and the specialty paper machine in UPM Changshu
made good contributions to our performance. We have now reached 80% of the EUR
200 million EBITDA target we have set for this first wave of growth investments.
Our second wave of focused growth investments is proceeding well. The Otepää
plywood mill and UPM Kaukas pulp mill expansions are ramping up in the fourth
quarter. The second expansion of UPM Kymi pulp mill is proceeding according to
plans. In October, we announced a EUR 35 million investment in UPM Raflatac
factory in Poland to meet the increasing label stock demand in Europe. In
Uruguay we are continuing negotiations on prospects for long-term development.
All in all, we have every reason to be pleased with the quarter. Our strong cash
flow enables both focused growth investments and attractive distribution to
shareholders. A strong balance sheet gives us the opportunity to accelerate
business transformation, when the opportunity and timing are right. UPM aims to
maintain a strong balance sheet in all situations."
Outlook for 2016
UPM's outlook for 2016 is unchanged. Profitability is expected to improve in
both the full year 2016 and H2 2016, compared with last year. Q4 2016
performance is expected to be negatively impacted compared to Q3 2016 by
seasonal factors and clearly higher maintenance activity in UPM Biorefining and
UPM Paper ENA.
UPM's growth projects are expected to contribute positively to the company's
earnings in 2016, compared with 2015. UPM is continuing its measures to reduce
variable and fixed costs in 2016. Currencies are expected to contribute
positively as hedges have rolled over.
Webcast and press conference
UPM's President and CEO Jussi Pesonen will present the results in a webcast and
a conference call for analysts and investors, held in English language, today at
13:15 EET.
Later in the afternoon, Jussi Pesonen will present the results in a press
conference held in Finnish language at the UPM Group Head Office (The Biofore
House) in Helsinki, Alvar Aallon katu 1, at 14:30 EET.
Webcast and conference call details:
The conference call can be participated in either by dialling a number in the
list below or following the webcast online at www.upm.com or through this link.
Only participants who wish to ask questions in the conference call need to dial
in. All participants can view the webcast presentation online. We recommend that
participants start dialling in 5-10 minutes prior to ensure a timely start of
the webcast.
The presentation is available at www.upm.com for 12 months after the call.
Conference call title: UPM Interim Report for January - September 2016
Direct telephone numbers:
FI: +358981710495
UK: +442031940552
SE: +46856642702
US: +18557161597
International telephone numbers with a pin code 75349746#
BE: 080049792 (Toll-Free)
FR: +33172040035
NO: +47 23500244
DK: +45 35445597
AU: +61 (0) 284058555
AT: +43 (0) 19287909
CH: +41 (0) 445831883
CN: +86 4006815487
DE: +49 (0) 6922224998
ES: +34 914146225
HK: +852 30600228
IN: 0018038524627
IR: +353 (0) 12475065
IT: +39 (0) 236010935
JP: +81 (0) 344559575
NL: +31 (0) 207133412
SP: +65 64298388
**
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 page 18 of the 2015 Annual Report. Risks and
opportunities are discussed on pages 17-18 and risks and risk management are
presented on pages 84-86 of the report.
**
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations
UPM, Media Relations
9.00-16.00 EET
tel. +358 40 588 3284
media(at)upm.com
UPM
Through the renewing of the bio and forest industries, UPM is building a
sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM
Raflatac, UPM Specialty Papers, UPM Paper ENA and UPM Plywood. Our products are
made of renewable raw materials and are recyclable. We serve our customers
worldwide. The group employs around 19,600 people and its annual sales are
approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM
- The Biofore Company - www.upm.com
Follow UPM on Twitter | LinkedIn | Facebook | YouTube | Instagram |
upmbiofore.com
UPM Interim Report Q3 2016:
http://hugin.info/165629/R/2051097/767379.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: UPM via GlobeNewswire
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