UPM RESULTS Q Jussi Pesonen President and CEO 28 July 2015

Transcription

1 UPM RESULTS Q2 215 Jussi Pesonen President and CEO 28 July 215

2 Q2 215 good progress continued, operating profit increased Operating profit excl. special items increased to EUR 227m (186m) + Profit improvement programme had a significant impact on variable and fixed costs + Currencies were favourable. This was moderated by hedging, mainly affecting UPM Paper ENA and UPM Paper Asia Publication paper prices in Europe were a negative factor, compared to last year Operating cash flow was strong at EUR 324m (215m) Growth projects progressed and capacity closures were implemented UPM is well positioned for earnings growth UPM

3 Q2 215 improvement year-on-year Q2 215 vs. Q2 214: Sales EUR 2,548m +4% EBITDA EUR 317m +12m Operating profit ( * EUR 227m +41m Profit before tax ( * EUR 23m +34m EPS ( * EUR ROE ( * 9.1% +1.8pp Operating cash flow EUR 324m +19m Net debt EUR 2,635m -29m Net debt / EBITDA 2.x -.4x Operating cash flow / share, 12 month EUR UPM ( * excluding special items

4 Profit improvement programme targeting EUR 15 million of fixed and variable cost savings EUR million Full annualised EUR 15 million impact of the programme is expected to realise by the end of 215, as compared with Q3/14 72% realised in Q2 215 Other fixed and variable cost savings 5 4 UPM Q314 Q414 Q115 Q215 Q315 Q415 Q116 ( * 8, tonnes of publication paper capacity in Europe: three paper machines were closed in Q1/15, one machine was closed in Q2/15 Fixed cost savings from closures ( *

5 EBITDA in Q2 215 vs. Q2 214 EURm 45 Profit improvement actions and currencies outweighed the decrease in sales prices EURm 45 Strong pulp markets and currencies benefited UPM Biorefining. Increased pulp costs and currency hedges impacted the paper businesses % Prices Deliveries Fixed costs Variable costs Currency, net % impact % Biorefining Energy Raflatac Paper Asia Paper ENA Plywood Other operations and eliminations % EBITDA Q2/14 5 UPM EBITDA Q2/15 EBITDA Q2/14 EBITDA Q2/15

6 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Operating profit * ) by business area EURm 125 UPM Biorefining % of sales 25 EURm 1 UPM Energy % of sales 5 EURm 5 UPM Raflatac % of sales EURm 5 UPM Paper Asia EURm UPM Paper ENA % of sales EURm UPM Plywood % of sales % of sales 12, , , UPM * ) excluding special items

7 Q18 Q38 Q19 Q39 Q11 Q31 Q111 Q311 Q112 Q312 Q113 Q313 Q114 Q314 Q115 Strong cash flow EUR million Cash flow, trailing 12 months Cash flow after investing activities Operating cash flow Q2 215 operating cash flow was EUR 324m (215m) In Q2 215, working capital decreased by EUR 31m (increased by EUR 36m) In the latest 12 months, operating cash flow was EUR 1,194m (1,27m), i.e. EUR 2.24 per share 7 UPM

8 Strong balance sheet Net debt, EUR million 5 Net debt / EBITDA (trailing 12 months) 4,5 Net debt, EUR million Gearing % Net debt / EBITDA 4, 3, Gearing , , Net debt 2, 2. 1, Net debt , UPM Liquidity was EUR 1.4bn at the end of Q2 215 Repayments total EUR.4bn in 215

9 Outlook for 215 The improved profitability achieved in 214 is expected to continue in 215, and there are prospects for further improvement. Profitability is underpinned by the EUR 15 million profit improvement programme, favourable currencies, as well as the first positive impacts from the company s growth projects. Profitability is affected by lower publication paper prices and lower electricity sales prices, compared to 214. In the second half of 215 compared to the first half of 215, UPM Paper ENA profitability is expected to improve. 9 UPM

10 Growth projects in ramp-up phase or nearing start-up EBITDA target EUR 2m Pietarsaari pulp mill expansion 7,t Fray Bentos pulp mill expansion 1,t Lappeenranta biorefinery 12m litres of renewable diesel Kymi pulp mill expansion 17,t Kaukas pulp mill efficiency improvement, paper and pulp decoupling completed Capex so far EUR 43m Remaining Capex EUR 34m Q2 214 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Q2 216 Q3 216 Q UPM UPM Raflatac 5% expansion in APAC, growth in filmic labelstock in Poland UPM Paper Asia Changshu new speciality paper machine 36,t UPM Plywood Otepää mill expansion to 9,m 3

11 Low investment needs in existing assets allow growth projects with modest total capex EUR million 1 2 Capital expenditure Estimate 1 8 Myllykoski acquisition Depreciation 6 Uruguay acquisition 4 Strategic investments UPM Operational investments e 216e

12 Summary Operating profit increased in H1 215 Profit improvement actions and currencies outweighed the market headwinds in UPM Paper ENA and UPM Energy UPM is well positioned for earnings growth Profit improvement programme continues More than half of the growth capex has been invested, nearly all of the EUR 2m EBITDA impact is yet to come Current exchange rates promise further tailwind Strong cash flow and balance sheet UPM is in a unique position to simultaneously distribute attractive dividend, implement growth projects and act on strategic opportunities 12 UPM

13 UPM strategy in action Plywood: Otepää expansion UPM Plywood Biofuels: Lappeenranta biorefinery Pulp: 1% capacity increase UPM Biorefining 2. EBITDA target for growth projects EUR 2m 3. Business portfolio development and value creation UPM Paper ENA 1. Profit improvement programme EUR 15m UPM Energy UPM Paper Asia UPM Raflatac Labelling materials: Changshu expansion Self-adhesive labels: expansion in growth markets and in higher value added products 4. New businesses BIOFUELS BIOCHEMICALS BIOCOMPOSITES 13 UPM

14 Strengths of UPM s model Attractive dividend Focused investments Strong cash flow Top performance Industry-leading balance sheet 14 UPM

15

16 Maturity profile and liquidity Liquidity Liquidity on 3 June 215 was EUR 1.4bn (cash and unused credit facilities) Committed credit facilities EUR.95bn EUR million 1 Maturity profile of outstanding debt EUR million 1 Committed credit facilities maturities UPM

17 Currency exposure Key currency exposures USD, GBP and JPY Policy to hedge an average of 5% of the estimated net currency cash flow for the next 12 months Estimated annual foreign currency net cash flow, before hedging USD GBP JPY Others EURm UPM

18 Q2 215 good progress continued EUR million 18 UPM Q2 215 Q2 214 Q1 215 H1 215 H Sales 2,548 2,441 2,486 5,34 4,922 9,868 EBITDA ,36 % of sales Operating profit ( * Profit before tax ( * Earnings per share, EUR ( * ROE, % ( * Operating cash flow ,241 Net debt 2,635 2,925 2,419 2,635 2,925 2,41 Gearing, % ( * excluding special items

19 Cash flow EUR million Q2/15 Q2/14 Q1/15 H1/15 H1/ EBITDA ,287 Cash flow before change in working capital ,291 Change in working capital Finance costs and income taxes Net cash from operating activities ,241 Capital expenditure Asset sales and acquisitions Cash flow after investing activities UPM

20 UPM Biorefining Operating profit excluding special items EUR million % of sales Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q Market review first half 215 Global chemical pulp demand remained robust and growth was well spread over several regions. USD-denominated NBSK pulp market price was lower, while BHKP price was higher than last year Euro-denominated pulp prices were clearly higher than last year The market price difference between NBSK and BHKP narrowed 2 UPM

21 UPM Energy Operating profit excluding special items Market review first half 215 EUR million Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 % of sales 5 Q The Nordic and Finnish hydrological balance improved and was above the long-term average level at the end of June. The average Finnish area spot price was clearly lower than the same period last year mainly because of improved hydrology and mild winter. The Finnish area front-year forward electricity price closed at EUR 32.9/MWh in June, which was 12% lower compared to end of June last year. 21 UPM

22 UPM Raflatac Operating profit excluding special items Market review first half 215 EUR million % of sales Global demand for self-adhesive label materials increased. Demand was robust in Western Europe and North America. In Eastern Europe, Asia and Latin America, growth continued. 1 2 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q UPM

23 UPM Paper Asia Operating profit excluding special items Market review first half 215 EUR million Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 % of sales 15 Q Growth in fine paper demand is levelling off, office paper demand is growing. The average market price in local currencies remained stable and was at the same level as in the first half of 214. The demand for labelling materials grew globally, and average prices remained stable. 23 UPM

24 UPM Paper ENA Operating profit excluding special items Market review first half 215 EUR million % of sales Europe Demand for graphic papers decreased by 5% Publication paper prices were 5% lower Fine paper prices were 3% higher -2-2 North America -4 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q Demand for magazine papers in North America decreased by 6% The average US dollar price for magazine papers was 2% higher 24 UPM

25 UPM Plywood Operating profit excluding special items Market review first half 215 EUR million Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 % of sales 2 Q Plywood demand continued to strengthen. Compared with first half of 214 demand development was somewhat stronger in industrial applications compared with construction-related end-use segments. The plywood market in Europe remained in balance. 25 UPM

26

27 Chemical pulp market Q2 NBSK pulp price decreased 6% from Q1 Q2 BHKP pulp price increased 4% from Q1 USD/tonne 1 1 Days of supply 65 Pulp inventories 1 9 NBSK Hardwood inventories BHKP Softwood inventories Source: FOEX Indexes Ltd. Source: PPPC World-2 statistics 27 UPM

28 Price development in the Nordic and Helsinki power markets EUR/MWh Finnish and Nordic electricity prices Coal SRMC Front Year System Front Year Helsinki Front Year Source: Reuters 28 UPM

29 Graphic paper prices EUR/t 1 Europe USD/t 13 North America USD/t 13 China Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 'Jan-14 Jan-15 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 'Jan-14 Jan-15 News SC LWC News SC LWC WFC r (1% chemical pulp) WFC Sources: PPI, RISI 29 UPM WFU WFC WFU Reels (mixed chemical/mechanical pulp) Uncoated Woodfree Reels (1% chemical pulp)

30 Graphic papers demand in Europe decreased by 5% in Q2 and in H1 215 vs last year ' tonnes 4 Magazine papers demand in Europe -5% H Newsprint demand in Europe -8% H Fine papers demand in Europe -3% H % 2 5-6% -7% Q1 1 Q3 1 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q1 1 Q3 1 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q1 1 Q3 1 Q1 11 Q3 11 Q1 12 3Q 12 Q1 13 Q3 13 Q1 14 Q3 14 Q UPM Sources: Cepiprint/fine, PPPC

31 Growth in the European economy remains low Euro zone composite leading indicator* (Y/Y %) 6, 3, Paper demand growth (% trailing 3 month) Euro zone composite leading indicator , -3, Graphic paper demand growth , UPM Sources: Cepiprint, Cepifine, OECD

32