UPM-Kymmene Corporation Financial Review 23 29 January 24
Key figures 23 23 22 Change Turnover, million EUR 9 948 1 475-527 Operating profit, excl. non-recurring items EUR million - % of turnover 655 6.6 1 18 1.6-453 -4. Profit before extraordinary items, EUR million 559 789-23 Earnings per share, EUR - excl. non-recurring items.7.57 1.6 1.12 -.36 -.55 Cash from operating activities per share, EUR 2.42 2.75 -.33 Paper deliveries, 1 t 1 342 9 918 424 Personnel at 31.12. 34 482 35 579-1 97 UPM-Kymmene Corporation 2
Quarterly figures UPM-Kymmene Corporation 3
Paper deliveries by quarter 1 t 3 Fine and Speciality Papers Newsprint Magazine Papers 2 5 2 1 5 1 5 IV/2 I/3 II/3 III/3 IV/3 Capacity utilization rate,% 85 87 87 88 89 UPM-Kymmene Corporation 4
Turnover by quarter MEUR 3, 2,5 2, 1,5 1, 5 2617 2458 251 2437 2552 IV/2 I/3 II/3 III/3 IV/3 UPM-Kymmene Corporation 5
Operating profit margin by quarter, excl. non-recurring items % 2 18 16 14 12 1 8 6 4 2 IV/96 IV/97 IV/98 IV/99 IV/ IV/1 IV/2 IV/3 4.8% UPM-Kymmene Corporation 6
Operating profit margins by division excl. amortization of goodwill and non-recurring items 1 (2) % 2 Magazine Papers Newsprint Fine and Speciality Papers 15 1 5 IV/2 I/3 II/3 III/3 IV/3 UPM-Kymmene Corporation 7
Operating profit margins by division excl. amortization of goodwill and non-recurring items 2 (2) % 1 Converting Division Wood Products Division 8 6 4 2 IV/2 I/3 II/3 III/3 IV/3 UPM-Kymmene Corporation 8
Variation analysis Earnings per share excl.non-recurring items Q3 vs Q4 EPS 7-9/23 EUR.16 Paper prices Paper deliveries Costs, paper* Other Financials net Income taxes EPS 1-12/23 -.7 -.11 -.2.2.3.1.11 -.2 -.16 -.12 -.8 -.4..4.8.12.16.2 * Paper Divisions fixed costs and raw material costs UPM-Kymmene Corporation 9
Cash from operating activities per share EUR 1, Operating cash flow per share 1-12/23 EUR.88 1-12/22 EUR.84,8,6,4,2, IV/2 I/3 II/3 III/3 IV/3 UPM-Kymmene Corporation 1
Annual figures UPM-Kymmene Corporation 11
Turnover MEUR 12 1 8 6 4 2 96 97 98 99 1 2 3 UPM-Kymmene Corporation 12
Operating profit Incl. non-recurring items Excl. non-recurring items MEUR 1 9 1 7 1 5 1 3 1 1 9 7 5 3 96 97 98 99 1 2 3 UPM-Kymmene Corporation 13
Operating profit by division 23, M 22, M Change, M Magazine Papers 153 225-72 Newsprint 54 162-18 Fine and Speciality Papers 241 359-118 Converting 43 7-27 Wood Products 29 37-8 Other Operations 264 29 55 Forestry department, Finland 41 37 4 Energy department, Finland 78 51 27 Share of results of associated companies 22 6-38 Other 123 61 62 Total 784 162-278 UPM-Kymmene Corporation 14
Profit before extraordinary items MEUR 2 Excl. non-recurring items Incl. non-recurring items 1 5 1 5 96 97 98 99 1 2 3 UPM-Kymmene Corporation 15
Return on capital employed, excl. non-recurring items % 2 15 Internal target: >15 % 1 5 5.6% 96 97 98 99 1 2 3 UPM-Kymmene Corporation 16
Return on equity excl. non-recurring items % 25 2 Minimum target Minimum target: 1 year bond +5 % 15 1 5 96 97 98 99 1 2 3 4.2% UPM-Kymmene Corporation 17
Cash from operating activities, investments and depreciation Tavoite: Acquisitions riskitön korko +5% Other capex Maintenance capex Cash from operating activities Depreciation MEUR 4, 3,5 3, 2,5 2, 1,5 1, 5 99 1 2 3 UPM-Kymmene Corporation 18
Gearing ratio and net interest-bearing liabilities Gearing ratio Net interest bearing liabilities % MEUR 12 1 8 6 4 2 Target: <1 % 7 6 4599 5 67% 4 3 2 1 99 1 2 3 99 1 2 3 Ratings: S&P BBB (stable), Moody s Baa1 (stable) UPM-Kymmene Corporation 19
Cash from operating activities per share EUR 4 2 3.32 3.19 2.75 2.4 2.42 99 1 2 3 UPM-Kymmene Corporation 2
Earnings per share Earnings per share excl. non-recurring items 1-12/23 EUR.57 1-12/22 EUR 1.12 Excl. non-recurring items Incl. non-recurring items, net EUR 3 2 1 2.4 1.61 1.7 1.12.57 99 1 2 3 UPM-Kymmene Corporation 21
Dividend per share Extra dividend Dividend Dividend year 23, proposal EUR 2, 1,5 1,,5, Dividends paid, MEUR 233 371 388 39 324 99 1 2 3 UPM-Kymmene Corporation 22
Price development and economic indicators UPM-Kymmene Corporation 23
Recovered paper price in Germany 1993-23/December 2 15 Euroa/tonni 1 5 93 94 95 96 97 98 99 1 2 3 4 Source: EUWID, grade: sorted graphic paper for deinking UPM-Kymmene Corporation 24
Paper price development in Europe 1994-23/December 1,4 1,2 News 45 g/m² SC rg 56 g/m² LWC off 6 g/m² WFCr 1 g/m² WFUr 8 g/m² Linear (News 45 g/m²) Euro / metric ton 1, 8 6 4 2 94 95 96 97 98 99 1 2 3 4 Source: PPI (average transaction price in UK, France and Germany) UPM-Kymmene Corporation 25
Paper price development in USA 1994-23/December 1,4 1,2 USD /metric ton 1, 8 6 4 2 News 48,8 g/m² SC 51,8 g/m² LWC 59,2 g/m² WFCr 88,8 g/m² WFUr off 74 g/m² 94 94 96 97 98 99 1 2 3 4 Source: RISI (average transaction price in the US) UPM-Kymmene Corporation 26
EU - leading indicator* and industrial production % change from previous year 1 8 3 months moving average, seasonally adjusted 6 4 EU - leading indicator* and industrial production 2-2 -4-6 -8 Composite leading indicator* Industrial production -1 9 91 92 93 94 95 96 97 98 99 1 2 3 *) index of the composite leading indicator of each EU country; Source: OECD UPM-Kymmene Corporation 27 Nov.
USA - leading indicator* and industrial production % change from previous year 1 8 6 4 2-2 -4-6 -8-1 3 months moving average, seasonally adjusted Composite leading indicator* Industrial production 9 91 92 93 94 95 96 97 98 99 1 2 3 *) Set of components: dwelling started, net new orders durable goods, share price index, consumer sentiment indicator, weekly hours of work (manufacturing), purchasing mangers index, spread of interest rates UPM-Kymmene Corporation Source: OECD 28 Nov.
Near term outlook Economic recovery continues in Europe and good growth in the USA and Asia UPM paper deliveries estimated to increase from 23 During the first quarter magazine paper prices remain largely unchanged Newsprint euro denominated contract prices slightly lower than last year Fine paper prices strengthen as demand rises Markets for speciality papers improve Converted products' markets improve gradually The Wood Products Division's markets continue to suffer from oversupply Operating profit for the first quarter is estimated to be somewhat lower than year ago, partly due to weaker US dollar UPM-Kymmene Corporation 29
Summary Lower paper prices and weakened dollar eroded profitability 23 despite improved paper demand Profitability fell clearly to unsatisfactory level Positives - Good cash flow and strong balance sheet - supported by cost savings program and improving general economic conditions New management team Aim at keeping UPM as one of the best paper and forest companies in the World. UPM-Kymmene Corporation 3
Forward-looking statement It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by "believes", "expects", "anticipates", "foresees", or similar expressions, are forward-looking statements. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development, acceptance of new products or services by the Group's targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group's patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group's products and the pricing pressures thereto, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group's principal geographic markets or fluctuations in exchange and interest rates. UPM-Kymmene Corporation 31
UPM UPM-Kymmene Corporation 32