Finland’s UPM released record earnings in the second quarter of 2022, driven by successful margin management in exceptionally tight markets for the company’s products.
All of the company’s businesses reported strong earnings amidst a volatile environment of rapid inflation in input costs and challenging supply and logistics chains. In addition, customer deliveries from its Finnish mills started smoothly after the end of the strike in late April.
“As a result, our quarterly sales increased by 7% to EUR 2,562 million, and comparable EBIT increased by 26% to EUR 387 million. This was a great achievement taking into account that during the first half we only had one month of normal full production. For the full year, we expect to reach a new record of annual earnings,” declared the executive.
“Operating cash flow was EUR -879 million and our net debt at the end of the quarter was EUR 2,688 million,” said the CEO.
This result was significantly impacted by the timing of cash flows from energy hedges during an unprecedented rise in energy prices. However, this cash flow is expected to reverse in the future, meaning that a significant part of the increase in net debt is temporary.
“Our financial position remains strong, with cash funds and unused committed credit facilities totaling EUR 1.5 billion at the end of Q2. We further improved our liquidity in July, with two new credit facilities totaling EUR 500 million. This gives us a solid base to push on with ongoing transformative growth investments and face the unpredictability of the operating environment,” Pesonen added.
In the pulp line, UPM Fibers achieved strong results in Q2. Production at the Finnish pulp mills started well after the business specific collective labor agreements were signed in April and two major maintenance shutdowns were completed.
“We are well prepared to face this uncertainty as our businesses are competitive and performing well, and our financial position is strong. This year, we are expecting our annual earnings to reach new record highs. Some of the uncertainties in the medium-term outlook are mitigated by our growth projects, which will add significant new earnings, ramping up as early as next year,” concluded the president of UPM.