Strong downturn in markets pushed Q2 results to exceptional lows – transformation continues
Q2 2023 highlights
- Sales were EUR 2,558 million (2,562 million in Q2 2022)
- Comparable EBIT decreased by 71% to EUR 114 million, 4.5% of sales (387 million, 15.1%)
- Delivery volumes were impacted by destocking in various product value chains
- Pulp and energy prices decreased to cyclical bottom levels
- Operating cash flow was EUR 459 million (-879 million), supported by cash inflow from energy hedges
- UPM Paso de los Toros pulp mill in Uruguay ramping up production according to the plan
- The OL3 nuclear power plant unit began regular commercial electricity production
- Permanent closures of PM6 at UPM Schongau, Germany and PM4 at UPM Steyrermühl, Austria
H1 2023 highlights
- Sales increased by 5% to EUR 5,345 million (5,069 million in H1 2022)
- Comparable EBIT decreased by 29% to EUR 470 million (664 million), and was 8.8% (13.1%) of sales
- Operating cash flow was EUR 1,173 million (-867 million), supported by cash inflow from energy hedges
- Net debt decreased to EUR 2,557 million (2,688 million) and the net debt to EBITDA ratio was 1.07 (1.42)
- Cash funds and unused committed credit facilities totalled EUR 6.4 billion at the end of Q2 2023
- UPM finalised its full exit from Russia
- UPM Leuna biochemicals refinery project schedule updated, start-up expected by the end of 2024 and investment estimate is EUR 1,180 million
Jussi Pesonen, President and CEO, comments on the results:
“During the first half of the year the business environment was exceptional. Geopolitical uncertainty, low economic activity and high inflation were impacting consumers. At the same time, the extraordinary destocking in product value chains continued in our industry. Consequently, we saw a strong and rapid downturn in the markets. Deliveries of our products were well below estimated end-use demand, and global commodity prices, such as pulp and energy, fell from historic highs to cyclical bottom levels in six months.
Therefore, our Q2 result was disappointing. Our sales were EUR 2,558 million, at the level of the previous year. Comparable EBIT decreased to EUR 114 million (Q2 2022: EUR 387 million). On top of market challenges, the quarterly result was impacted by high maintenance activity in UPM Fibres, UPM Energy and UPM Biofuels, as well as the normal start-up costs of UPM Paso de los Toros. Operating cash flow was a solid EUR 459 million, supported by cash inflow from energy hedges. Our balance sheet remains very strong. Net debt decreased to EUR 2,557 million. Cash funds and unused committed credit facilities totalled EUR 6.4 billion at the end of the quarter.
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