UPM Posts Lower 1Q Earnings on Weak Demand
April 29, 2009 - UPM today said that its profitablity suffered in the first quarter of 2009 due to lower demand across all of the company's business units.
- Earnings per share for the first quarter were EUR -0.30 (EUR 0.20), and excluding special items EUR -0.27 (EUR 0.19)
- Operating loss was EUR 95 million (profit of EUR 193 million), and excluding special items operating loss was EUR 78 million (profit of EUR 188 million)
- Operating cash flow was EUR 274 million (EUR 50 million).
“Sales for the first quarter were 23% lower than a year ago," said Jussi Pesonen, UPM's president and CEO. "Demand for papers, labels, plywood and sawn timber dropped and we had significantly lower deliveries across all of UPM’s businesses. Thus our profitability declined markedly and we made an operating loss.
“Operating in these extreme circumstances has been challenging. Despite this, the EBITDA margin of our Paper business improved. Paper has managed the situation by maintaining higher prices, streamlining operations and adjusting production to demand. We also paid particular attention to the market and customer mix.
“The focus has been on cash preservation and cost savings. The operating cash flow was good. Thanks to permanent cost saving measures and temporary layoffs we lowered fixed costs by EUR 70 million compared to last year. High wood and energy costs continue to remain a challenge.
“During the past three years UPM has restructured production significantly and renewed the operating mode of the whole company. We now have an efficient portfolio of assets and a fit-for-purpose organisation which works well also in the current environment of slow growth.
“This year we do not expect economic activity to pick up in a way that would have a substantial impact on the demand for our main products. This means markedly lower deliveries than last year and temporary production downtimes in most of our product lines.”