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UPM Reports “Record Quarter” for Third Quarter 2021

“The demand for our products was good, particularly in Europe and North America, and sales prices increased in all our businesses.” – Jussi Pesonen, President and CEO, UPM.

UPM today announced that its third quarter 2021 was a “record quarter” for the company. Jussi Pesonen, President and CEO of UPM, made the following comments on the 3Q results:

“The third quarter of the year was the best-ever quarter for UPM. At the same time, we have been able to make good progress with our transformative investments. These achievements are remarkable in an exceptionally volatile and uncertain global business environment, and I want to thank all UPMers for the resilience and determination they have shown.

“The demand for our products was good, particularly in Europe and North America, and sales prices increased in all our businesses. However, variable costs rose rapidly across the board as well. Most notably the energy markets have changed dramatically in a short period of time. Our operational efficiency was excellent despite the challenges in logistics and global supply chains.

“Q3 sales increased by 24% to EUR 2,523 million. Comparable EBIT was up by 98% rising to EUR 424 million from the lockdown affected Q3 of last year. Comparable EBIT margin reached 16.8%. Operating cash flow was EUR 318 million and our financial position remains very strong. Net debt at the end of September was EUR 667 million, 0.38 times EBITDA, and our cash funds and unused committed credit facilities totalled EUR 2.5 billion.

“UPM Biorefining reached record quarterly earnings thanks to significantly higher pulp and timber sales prices and excellent operational efficiency. The pulp market continued to be strong in Europe but softened in Asia. Demand for advanced renewable diesel and naphtha was also strong, and our Lappeenranta biorefinery restarted production in early August after the fire related repairs.

“UPM Raflatac continued to be one of our star performers. Demand growth was consistently strong across most markets and end-uses. Input costs rose rapidly during the quarter but were mitigated by successful margin management.

“The market situation for UPM Specialty Papers was twofold. On the one hand, demand for release, label and packaging papers remained strong in all markets and sales prices increased significantly. On the other hand, fine paper demand in Asia slowed down and prices decreased. High input costs and the exceptional energy market situation in China affected the results.

“Despite good market demand in Europe and the implementation of price increases, UPM Communication Papers was loss-making in the quarter. On top of the anticipated cost increases in pulp, recycled fibre and logistics, the emerging energy crisis in Europe resulted in unforeseen cost increases despite hedging. The sale of UPM Shotton newsprint mill was concluded at the end of the quarter.

“UPM Energy delivered excellent earnings. The business benefitted from significantly higher electricity sales prices and it successfully implemented optimisation and value creation measures for the volatile markets.

“UPM Plywood also achieved record quarterly earnings. Market demand for both spruce and birch plywood continues to be strong and price increases have been successful. The business also made good progress in operational efficiency, reaching higher production volume than a year ago.

“In Uruguay, we have now reached peak activity with more than 6,000 workers on our construction sites. The investment project is progressing intensively in all main areas. In Leuna, Germany, our biochemicals investment is making progress both at the construction site and in business preparation. The pandemic and global logistics bottlenecks pose challenges to large projects, and we continue implementing mitigating actions to ensure timely progress.

“The commercialisation of the next generation biochemicals is taking significant steps forward. We are especially excited about our cooperation with Coca-Cola Company. UPM’s bioMEG from the Leuna biorefinery will enable wood-based, recyclable PET bottles. In addition, we launched UPM BioMotion™ renewable functional fillers to significantly reduce CO2 footprint and weight of rubber and plastics applications in a variety of end-uses.

“On the eve of UN climate change conference COP26, we underline the importance of renewable solutions. Undisputedly the most effective way to mitigate climate change is reducing the use of fossil-based raw materials and energy radically. UPM offers alternatives to fossil-based materials and creates a future beyond fossils, enabling our customers and consumers to make sustainable choices. Our climate action is based on significant emissions reductions, managing forests sustainably and innovating climate-positive products. These actions support the UN Business Ambition for 1.5 degrees to which we are committed.”


The global economy has started recovering in 2021 from the deep downturn experienced in 2020. World regions will progress at different pace. China has led this development but has recently slowed down to some extent. Demand for most UPM products is influenced by overall economic activity and hence, depends on the shape and rate of the economic recovery.

The COVID-19 pandemic continues to cause uncertainty in 2021. In 2020, lockdowns had a significant negative impact on graphic paper demand but supported the strong demand for self-adhesive labelling materials and specialty papers. Opening of the economies is likely to allow for some normalisation of these demand impacts.

Sales prices for many UPM products are expected to increase in H2 2021 from H1 2021, including graphic paper prices in Europe. Pulp sales prices increased rapidly in H1 2021 and are expected to be higher on average in H2 2021 than in H1 2021.

With improving global economy, many variable cost items are expected to increase in 2021. During H2 2021 the tight energy market situation is expected to cause increased costs both directly and indirectly. UPM will continue to manage margins with product pricing, optimizing its product and market mix, efficient use of assets as well as by taking measures to improve variable and fixed cost efficiency.

UPM’s comparable EBIT is expected to increase both in H2 2021 compared with H1 2021 and increase clearly in the full year 2021 compared with 2020.

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