UPM-Kymmene (UPM) Q2 2024 earnings summary

Executive summary

• Comparable EBIT increased by 60% year-over-year in Q2 2024 to EUR 182 million, driven by improved demand, market recovery, and the Paso de los Toros pulp mill reaching full capacity ahead of schedule, despite high maintenance activity and political strikes in Finland.

• Sales in Q2 2024 were EUR 2,546 million, nearly flat compared to Q2 2023, while H1 2024 sales declined 3% to EUR 5,186 million.

• Strategic actions included new business-specific labor agreements in Finland, planned closures of the Hürth newsprint mill, Nordland fine paper machine, and UPM Biocomposites, as well as the acquisition of Grafityp to expand in the graphics market.

• UPM Biochemicals is preparing for the Leuna refinery business launch by end of 2024, with robust customer interest and partnerships announced.

• High maintenance activity and political strikes in Finland impacted H1 2024 results, but assets are now positioned for strong H2 performance.

Financial highlights

• Q2 2024 comparable EBIT was EUR 182 million (7.2% of sales), up from EUR 114 million (4.5%) in Q2 2023; delivery volumes increased and variable costs decreased, offsetting lower sales prices.

• Maintenance shutdowns in Q2 impacted EBIT by EUR 130 million; total impact including Q1 was EUR 140 million.

• Net debt at quarter-end was EUR 2,763 million; net debt to EBITDA at 1.64x, reflecting dividend payments.

• Dividend payment of EUR 400 million in Q2; EUR 1.50/share for 2023, paid in two instalments.

• H1 2024 operating cash flow was EUR 539 million, down from EUR 1,173 million in H1 2023.

Outlook and guidance

• Full-year 2024 comparable EBIT is expected to increase from 2023, supported by higher deliveries, Paso de los Toros ramp-up, and lower fixed costs.

• H2 2024 EBIT is expected to improve, especially in Fibers, with no major maintenance or strike impacts anticipated.

• Market conditions for renewable fuels are expected to remain weak; margin management and cost reduction actions are ongoing.

• Customary annual energy-related refunds are expected in Q4.