UPM reported sales increased by 11% to EUR 2,787 million in first quarter. Comparable EBIT grew by 29% to EUR 356 million, 12.8% of sales. According to the company, delivery volumes were impacted by destocking in various product value chains but had a successful margin management.
Operating cash flow was EUR 714 million, supported by cash inflow from energy hedges while net debt increased to EUR 2,167 million and the net debt to EBITDA ratio was 0.82.
“We delivered our second-best first quarter result in more than 20 years, even though it was held back by a short-term lack of volumes. After a year of rapid inflation and scarcity of goods, 2023 began with intense destocking in most product value chains. We succeeded in managing margins and adapting our operations to the situation”, said Jussi Pesonen, President and CEO at UPM.
This quarter, the company also started up its pulp plant in Paso de los Toros, Uruguay, which should improve its future results.
“Despite the short-term turbulence, the long-term growth prospects remain unchanged and attractive. We continue to focus on managing margins. We expect the impact of destocking to phase out in the coming months. Moreover, many variable costs have already passed their peak but the benefit to UPM businesses is yet to materialise in our results”, added Pesonen.
According to the CEO, UPM Paso de los Toros will supply sustainable products to meet global consumer demand and grow the company pulp business by over 50%. The cash cost level of approximately $280 per delivered tonne of pulp makes it one of the most competitive pulp mills in the world. “The total investment of USD 3.47 billion will create wellbeing in the surrounding communities and benefit the whole Uruguayan economy. For UPM, the plantation-based business platform offers further growth opportunities in various biomaterials in the long term”, said the president of UPM.
OUTLOOK FOR 2023
UPM reached record earnings in 2022, and 2023 is expected to be another year of strong financial performance while UPM’s delivery volumes are expected to benefit from the ramp up of the Paso de los Toros pulp mill.
Year 2023 is starting with high-cost level for many inputs, while the lower demand is exerting pressure on product prices. However, several input costs have also progressed past their peak. UPM will continue to manage margins with product pricing, by optimizing its product and market mix and by taking measures to improve variable and fixed cost efficiency.
For the company, there are significant uncertainties, both positive and negative, in the outlook for 2023, related to the European, Chinese and global economy, Russia’s war in Ukraine, the remaining effects of the pandemic, energy prices and related regulation in Europe.
