UPM Half-Year Financial Report 2024: Comparable EBIT increased by 60% in Q2, UPM Paso de los Toros reached full capacity
UPM-Kymmene Corporation Stock Exchange Release (Half-Year Financial Report) 23 July 2024 at
UPM Half-Year Financial Report 2024:
Comparable EBIT increased by 60% in Q2, UPM Paso de los Toros reached full capacity
Q2 2024 highlights
- Sales totalled
EUR 2,546 million (2,558 million in Q2 2023) - Comparable EBIT increased by 60% to
EUR 182 million , 7.2% of sales (114 million, 4.5%) - Operating cash flow was
EUR 204 million (459 million) - Moderate recovery in many product markets
- UPM Paso de los Toros pulp mill reached nominal capacity before its first maintenance shutdown in June
- Unusually high maintenance activity with three pulp mills and all nuclear power plant units having scheduled maintenance
H1 2024 highlights
- Sales decreased by 3% to
EUR 5,186 million (5,345 million in H1 2023) - Comparable EBIT increased by 10% to
EUR 515 million (470 million), and was 9.9% (8.8%) of sales - Operating cash flow was
EUR 539 million (1,173 million) - Net debt increased to
EUR 2,763 million (2,557 million) and the net debt to EBITDA ratio was 1.64 (1.07) - Cash funds and unused committed credit facilities totalled
EUR 3.3 billion at the end of Q2 2024 - Sale of the Steyrermühl site,
Austria in January - CDP recognised UPM with double 'A' score for transparency on climate change and forest
Key figures
|
Q2/2024 |
Q2/2023 |
Q1/2024 |
Q1–Q2/2024 |
Q1– Q2/2023 |
Q1– Q4/2023 |
Sales, EURm |
2,546 |
2,558 |
2,640 |
5,186 |
5,345 |
10,460 |
Comparable EBITDA, EURm |
359 |
255 |
489 |
848 |
732 |
1,573 |
% of sales |
14.1 |
10.0 |
18.5 |
16.3 |
13.7 |
15.0 |
Operating profit, EURm |
50 |
108 |
354 |
404 |
426 |
608 |
Comparable EBIT, EURm |
182 |
114 |
333 |
515 |
470 |
1,013 |
% of sales |
7.2 |
4.5 |
12.6 |
9.9 |
8.8 |
9.7 |
Profit before tax, EURm |
28 |
96 |
332 |
360 |
336 |
464 |
Comparable profit before tax, EURm |
163 |
101 |
311 |
474 |
445 |
934 |
Profit for the period, EURm |
33 |
77 |
279 |
312 |
261 |
394 |
Comparable profit for the period, EURm |
131 |
77 |
258 |
389 |
358 |
755 |
Earnings per share (EPS), EUR |
0.05 |
0.15 |
0.51 |
0.56 |
0.48 |
0.73 |
Comparable EPS, EUR |
0.23 |
0.15 |
0.47 |
0.70 |
0.66 |
1.40 |
Return on equity (ROE), % |
1.1 |
2.5 |
9.6 |
5.5 |
4.2 |
3.2 |
Comparable ROE, % |
4.6 |
2.5 |
8.9 |
6.9 |
5.8 |
6.2 |
Return on capital employed (ROCE), % |
1.6 |
3.0 |
9.6 |
5.7 |
4.5 |
3.5 |
Comparable ROCE, % |
5.2 |
3.1 |
9.1 |
7.2 |
5.8 |
6.4 |
Operating cash flow, EURm |
204 |
459 |
335 |
539 |
1,173 |
2,269 |
Operating cash flow per share, EUR |
0.38 |
0.86 |
0.63 |
1.01 |
2.20 |
4.25 |
Equity per share at the end of period, EUR |
20.10 |
21.24 |
21.42 |
20.10 |
21.24 |
20.93 |
Capital employed at the end of period, EURm |
14,590 |
15,322 |
15,028 |
14,590 |
15,322 |
14,916 |
Net debt at the end of period, EURm |
2,763 |
2,557 |
2,312 |
2,763 |
2,557 |
2,432 |
Net debt to EBITDA (last 12 months) |
1.64 |
1.07 |
1.46 |
1.64 |
1.07 |
1.55 |
Personnel at the end of period |
16,776 |
17,571 |
16,132 |
16,776 |
17,571 |
16,573 |
UPM presents certain measures of performance, financial position and cash flows, which are alternative performance measures in accordance with the guidance issued by the
Massimo Reynaudo, President and CEO, comments on the results:
"In Q2, our comparable EBIT increased by 60% on last year, in line with our expectations. The continued improvement was sustained by a moderate recovery in our product markets as well as a greater contribution from the UPM Paso de los Toros pulp mill in
Our Q2 sales were
In UPM Fibres, pulp demand was good, and prices continued to increase. A very important milestone was reached in the UPM Paso de los Toros pulp mill in
UPM Specialty Papers delivered good results despite higher pulp prices. In
UPM Communication Papers' profitability decreased due to delivery volumes that were impacted by lower demand after the restocking in Q1, and the political strikes in
UPM Energy had a weak quarter of seasonally lower electricity prices and prolonged maintenance activities at Olkiluoto nuclear power plant units.
UPM Plywood continued its steady performance in a seasonally good quarter with all plywood mills running at full capacity. EU anti-dumping measures on the imports of birch plywood from
In Other operations, the European market for advanced renewable fuels continued to be soft and the performance of our biofuels business remained at the level of the previous quarter.
We have made further progress with the design for the potential biofuels refinery in
We remain confident that the future growth in demand for advanced renewable fuels is attractive. The recent market turmoil only confirms our view that a differentiated, competitive and sustainable feedstock range will be the key to ensuring profitability over market cycles and potential regulatory developments.
Our entry to the highly attractive biochemicals market is approaching.
During the quarter, we struck five new business-specific collective labour agreements in
For the second half of the year, we anticipate strong run and improving results. Our biggest investment ever, the UPM Paso de los Toros pulp mill, has moved from ramp-up to regular production. With our competitive
Outlook for 2024
UPM's full-year 2024 comparable EBIT is expected to increase from 2023, supported by higher delivery volumes, the ramp-up and optimisation of the UPM Paso de los Toros pulp mill, and lower fixed costs. Demand for many UPM products is expected to gradually improve as the destocking seen in 2023 is over. The market conditions for renewable fuels are expected to be weaker than last year. UPM continues to manage margins and take actions to reduce variable and fixed costs.
In H2 2024, comparable EBIT is expected to be higher than in H1 2024. This improvement is expected to come especially from UPM Fibres, with the full pulp capacity available and pulp price levels starting at a higher level than at the start of the year. There are no major maintenance shutdowns scheduled for the company in H2 2024, whereas H1 2024 was impacted by unusually high maintenance activity and political strikes in
Invitation to UPM's webcast on half year financial report 2024
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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 178–179 of the Annual Report 2023. Risks and opportunities are discussed on pages 34–35, and risks and risk management are presented on pages 133–137.
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