UPM reports record results in 2022, with EBIT 42% higher
According to the company, sales prices increased in all business areas and more than offset the negative impact of higher variable costs
In 2022, UPM achieved record results. The company’s sales increased 19% to 11.72 million euros, while comparable EBIT grew 42% to 2.9 million euros.
Already in the fourth quarter, the company registered a 21% increase in sales, reaching 3.23 million euros, with EBIT advancing 42%, to 653 million euros.
According to the company, sales prices increased in all business areas and more than offset the negative impact of higher variable costs.
“2022 was a pivotal year for UPM. We delivered all-time high annual sales and earnings, driven by success across all of our businesses. At the same time, our transformative growth projects proceeded as planned, getting ready to deliver growth already this year. This remarkable achievement shows UPM’s resilience in an exceptional environment marked by high inflation, Russia’s war in Ukraine, and the European energy crisis. These challenges were met with commercial and operational agility. I am very proud of the company and all UPMers,” said Jussi Pesonen, President and CEO of UPM.
For the executive, the results of the fourth quarter were also excellent. “The quarter was the second best-ever quarter for the company, paling by comparison only to the previous quarter,” commented Pesonen.
Analyzing the net debt to EBITDA ratio, the UPM reached a good level of 0.94. In addition, cash funds and unused committed credit facilities at the end of the year totaled EUR 6.4 billion. Therefore, the financial position of the company is very strong.
According to the CEO, in most businesses, margins continued to improve even after the strong record of the third quarter. As a result, prices and margins in the fourth quarter reached record levels.
In this sense, the quarterly results of UPM Fibres reflected the high prices of pulp, but were impacted by the increase in input costs and the stoppage for maintenance of the UPM Fray Bentos pulp mill in Uruguay.
“Our large investment project in Uruguay is nearing completion. The pulp terminal in Montevideo was inaugurated in October, and the construction of the Paso de los Toros pulp mill was finalised at the turn of the year. The mill is now solidly on track in the commissioning stage and the start-up will take place by the end of Q1”, added the company’s president.
As the executive explains, the cash cost level of approximately USD 280 per delivered ton of pulp will make the unit one of the most competitive pulp mills in the world and will increase UPM’s pulp production by more than 50%, to 5, 8 million tons per year.
OUTLOOK FOR 2023
UPM achieved record earnings in 2022 and expects 2023 to be another year of strong financial performance.
In 2023, UPM’s delivery volumes are expected to benefit from the ramp-up of the UPM Paso de los Toros pulp mill. At the start of the year, however, demand for many UPM products is expected to be held back by destocking in various product value chains. The opening of the Chinese economy from the COVID lockdowns and easing inflation in other key economies represent potential for increasing demand as the year progresses.
“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 optimising its product and market mix and by taking measures to improve variable and fixed cost efficiency,” added Jussi Pesonen.
“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,” concluded the executive.
