Consumables

UPM improved first quarter margins despite challenging cost environment, Earnings guidance for 2011 unchanged

Thursday 28. April 2011 - Interim report for January-March 2011

Earnings per share were EUR 0.33 (0.13), excluding special items EUR 0.32 (0.15)
Operating profit excluding special items was EUR 198 million (116 million)
Sales growth continued, driven by both sales prices and delivery volumes
Earnings guidance for 2011 unchanged
Key figures Q1/2011 Q1/2010 Q1-Q4/2010
Sales, EURm 2,356 2,039 8,924
EBITDA, EURm 1) 379 288 1,343
% of sales 16.1 14.1 15.0
Operating profit, EURm 198 107 755
excluding special items, EURm 198 116 731
% of sales 8.4 5.7 8.2
Profit before tax, EURm 195 82 635
excluding special items, EURm 195 91 611
Net profit for the period, EURm 169 70 561
Earnings per share, EUR 0.33 0.13 1.08
excluding special items, EUR 0.32 0.15 0.99
Operating cash flow per share, EUR 0.32 0.40 1.89
Shareholders’ equity per share at end of period, EUR 13.87 12.62 13.64
Gearing ratio at end of period, % 44 54 46
Net interest-bearing liabilities at end of period, EURm 3,197 3,569 3,286

1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets, excluding the share of results of associated companies and joint ventures, and special items.
Jussi Pesonen, President and CEO, comments on the first quarter of 2011:
“UPM’s earnings showed a clear improvement compared to the same period last year, due to higher sales prices and delivery volumes in most of our businesses. We are now finally seeing market pick up even in our Plywood business.
Our first quarter sales grew by 16% compared to the same period last year. Despite the very clear increase in variable costs, our EBITDA margin was better than it was in the full year of 2010.
The improvement in earnings comes from our Paper and Pulp business areas. In Paper, delivery volumes improved, especially in markets outside Europe. The operating loss of the Paper business decreased thanks to better prices and deliveries. At the beginning of the year paper prices increased on average by 6%. The Pulp business continued to perform well due to remarkably high market prices and more deliveries.
It is clear that UPM is now well positioned both in terms of business cycle and strategy,” Pesonen concludes.
Outlook for 2011
UPM’s earnings guidance for 2011 is unchanged. The operating profit excluding special items for 2011 is expected to improve on last year. In the first half of 2011, operating profit excluding special items is expected to be clearly higher than that of the first half of 2010.
The favourable delivery volume development seen in the first quarter is expected to continue.
Sales prices are also expected to remain stable or improve, depending on the business area.
Variable cost inflation has turned out to be higher than expected at the start of the year, especially in chemical pulp and recovered paper as well as oil-related costs, such as logistics and chemicals. The cost of wood raw material is expected to be stable at the level seen in the first quarter and latter part of 2010. Overall cost inflation in 2011 is now estimated to be about the same as in 2010.

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