"Amidst the trade uncertainties and weakening consumer confidence, we intensified actions to both sharpen our competitiveness and to execute our portfolio strategy." – Massimo Reynaudo, President and CEO, UPM.
Feb. 4, 2026 - UPM today reported fourth quarter and full-year 2025 results. UPM's President and CEO, Massimo Reynaudo, said the company's performance improved in the fourth quarter with strong cash flow.
"Year 2025 was characterized by escalating geopolitical and trade tensions, which had an adverse effect on our business environment. Amidst the trade uncertainties and weakening consumer confidence, we intensified actions to both sharpen our competitiveness and to execute our portfolio strategy. This resulted in a visible improvement of performance in most businesses and a very strong cash flow in the fourth quarter.
We launched significant strategic initiatives that continue to transform the company. In February, we acquired Metamark in Adhesive Materials. In May, we refocused our biofuels growth strategy and discontinued the biorefinery development in Rotterdam. In September, we started the strategic review of our Plywood business. In December, we announced the plan to establish a graphic paper joint venture that would encompass the UPM Communication Papers business and Sappi's graphic paper operations in Europe.
By these portfolio initiatives, we aim to change the profile of the company, increasing its growth focus and improving the margins and leverage. Future UPM would have an attractive portfolio focused on renewable fibres, advanced materials and decarbonization solutions. All these businesses operate in growing markets. Across these businesses UPM has shown a strong track record of realized growth above GDP.
During the year, we restructured our production footprint in Adhesive Materials and Communication Papers and took efficiency measures in all our businesses to increase competitiveness. In Finland, we mitigated the pulp and wood market challenges with production curtailments and entered into a long-term strategic partnership with Versowood, which will strengthen our position in the tight wood markets. We intensified our actions to improve working capital efficiency.
In Q4, the market environment started to stabilize. We improved our performance in most businesses compared to the preceding quarter, resulting in a comparable EBIT of €355 million. Q4 operating cash flow was particularly strong at €720 million. Net debt decreased during the quarter, while we also paid out the second instalment of dividends.
UPM Fibres' performance in Q4 improved from the previous quarter. Fibres South performance continued strong, with good progress on cost management, well managed maintenance shutdown in UPM Fray Bentos and gradually increasing hardwood pulp prices. In Fibres North, performance improved but the combination of high wood cost and low softwood pulp prices resulted in a negative quarterly EBIT. During the second half of the year, we saw wood market prices decrease in Finland, with the cost impact materializing later during 2026.
In the advanced materials businesses, UPM Specialty Papers achieved good results, improving performance from the previous quarter and year-on-year. UPM Adhesive Materials continued to grow faster than the markets, but results were weighed down by lower margins during the quarter, and the ongoing efficiency measures are not yet fully visible in the results.
UPM Plywood had a solid quarter as production ran at full capacity. Demand for LNG birch plywood was strong whereas the market for spruce plywood remained challenging.
In decarbonization solutions, the various end markets continued to show positive development in Q4.
UPM Energy had a good quarter of seasonally higher production volumes and market prices. Our own optimization on the physical markets continued to generate strong results. Electrification continued to drive electricity demand growth in Finland.
UPM Biofuels had excellent production efficiency and improved market conditions and is now back in positive EBIT contribution. The business improved its performance each quarter throughout the year.
In UPM Biochemicals, we are now in commercial business, with the first customer deliveries of industrial sugars taking place in Q4. We will continue to introduce further products to the market during the first half of this year, the next step being the renewable functional fillers. Demand and interest for our biochemicals products is robust.
UPM Communication Papers delivered Q4 results on par with Q4 2024. However, the annual results were lower due to continued structural market decline. During the quarter UPM Communication Papers stopped production at its Kaukas mill in Finland and at its Ettringen mill in Germany, reducing its paper production capacity by 13%.
We are entering 2026 with some cautious optimism. The business environment at the beginning of the year is showing signs of stability, even if there continue to be uncertainties in geopolitics and trade. We will continue to focus on performance, cash generation, strengthening the balance sheet and successfully completing the strategic portfolio initiatives.
Confident in UPM's strategy and ability to create value, the Board of Directors has today proposed an unchanged dividend of €1.50 per share for 2025. The dividend represents 113% of UPM's comparable earnings per share for 2025."
Profit guidance
UPM's comparable EBIT in H1 2026 is expected to be approximately in the range of €325-525 million (€413 million in H1 2025, and €508 million in H2 2025).
Outlook
The business environment at the beginning of the year is showing signs of stability, even if there continue to be significant uncertainties in geopolitics and trade.
In H1 2026, compared with H2 2025, UPM's performance is expected to benefit from moderately higher sales prices and delivery volumes and moderately lower fixed costs. Performance is expected to be held back by continued weak communication paper markets and increased costs during the early phase of the production ramp-up at UPM Leuna. Currencies started the year at similar levels, compared with H2 2025. Comparable EBIT in H2 2025 benefited from the timing of energy refunds and increased fair value of forest assets, items that are not expected to take place during H1 2026 in similar quantities.
In H1 2026, compared with H1 2025, UPM's performance is expected to benefit from lower variable costs and moderately higher delivery volumes. Maintenance activity is expected to be lower than in the comparison period. Performance is expected to be held back by continued weak communication paper markets and increased costs during the early phase of the production ramp-up at UPM Leuna. Currencies at the beginning of the year are negative to comparable EBIT, compared with H1 2025.
Sensitivity to pulp and electricity prices
UPM's comparable EBIT is sensitive to pulp and electricity prices. The figures below represent group earnings sensitivities on annual level.
UPM is a large producer and consumer of chemical pulp. A €50/tonne change in average pulp price would impact annual comparable EBIT by approximately €180 million (net impact: assuming no correlation between pulp and paper prices) to approximately €270 million (gross impact: assuming paper pricing would match changes in pulp costs).
UPM is a large producer and consumer of electricity in Finland and separately hedges part of its electricity sales and purchases. Based on UPM's estimated unhedged net electricity sales position in Finland in 2026, a €10/MWh change in average electricity market price in Finland would impact annual comparable EBIT by approximately €40 million.
Foreign exchange exposure
Fluctuations in monetary policies and economic conditions can significantly impact the value of various currencies, which in turn may affect UPM. Additionally, the escalation of global trade tensions could influence currency exchange rates. These currency fluctuations could impact UPM's cash flow, earnings, or balance sheet, and may also affect the relative competitiveness between different currency regions.
The group's policy is to hedge an average of 50% of its estimated net currency cash flows on a rolling basis over the next 12-month period. At the end of 2025, UPM's estimated net currency cash flows for the next 12 months totaled approximately €1.5 billion. USD was the largest exposure at approximately €1.3 billion, followed by UYU, GBP and JPY. In addition, the earnings of UPM's foreign subsidiaries are translated to euros in reporting. UPM has significant foreign subsidiaries in Uruguay, the U.S. and China. Foreign exchange risks are discussed in UPM's Annual Report 2024 on pages 305–306.
UPM is a material solutions company, renewing products and entire value chains with an extensive portfolio of renewable fibres, advanced materials, decarbonization solutions, and communication papers. The company operates globally and employs approximately 15,100 people worldwide, with annual sales of approximately EUR 9.7 billion.
SOURCE: UPM