Consumables

UPM demonstrates firm progress in transformation

Tuesday 11. March 2014 - Jussi Pesonen, UPM's President and CEO is confident in UPM's stable outlook and attractive growth plans as presented during the company's Capital Markets Day in London.

“In the past five years, we have successfully turned UPM from an integrated paper producer into a Biofore company with six separate businesses. Today we have strong market positions and competitive assets in all of our business areas. This gives us a strong basis for driving further both the financial performance and the transformation of the company.”
“Our short-term profit improvement programme proceeds very well and we are confident of achieving the targeted EUR 200 million cost savings by the end of this year. Simultaneously, we are making good progress with our growth portfolio adding further EUR 200 million of EBITDA in the coming three years. The recently announced investments in Changshu and Kymi confirm our progress towards this target. “
Pesonen said that the new business structure enables clear target setting and incentives in all of the six businesses.
“As we have growth aspirations in many of our businesses, we have also set ROCE targets for the business areas. In UPM Energy we value our asset base at fair value and hence our ROCE target is 6 %. In the less capital intensive converting industry, UPM Raflatac, our ROCE target is at 18%. Finally, in our process industry businesses UPM Biorefining, UPM Paper Asia and UPM Plywood we are targeting 10-12 % ROCE, or cash return in the case of UPM Paper ENA.”
“UPM’s group-level operating profit target of 10% is realistic also in the context of the new business structure. With this business structure, achieving the business area targets simultaneously would result into UPM operating profit margin of approximately 10%, and ROCE of approximately 9%.”
“Despite the volatile economic environment in recent years, we have been able to drive forward the changes in the UPM portfolio. At the same time UPM’s cash flow has been consistently strong and our balance sheet has continuously strengthened.”
“Our group-level commitment is to maintain a solid balance sheet, strong cash flow and healthy dividend. UPM will continue to develop its business portfolio in order to create growth in the current and new businesses and enhance the value of the company. “