Jussi Pesonen
President and CEO
29 April 2014
UPM Q1 RESULTS 2014
| © UPM
Strong Q1 2014 results show momentum in
the profit improvement programme
Q1/14 EBITDA was EUR 313m (284m in Q1/13)
Profit improvement programme progressed fast, with 78% of the
targeted annualised EUR 200m cost savings achieved in Q1/14
Operating profit excl. special items was EUR 196m (144m in Q1/13)
Strong operating cash flow of EUR 264m (103m in Q1/13)
Net debt decreased to EUR 2,777m (3,199m in Q1/13) and net debt
to EBITDA to 2.4x (2.6x in Q1/13)
| © UPM 2
| © UPM
Profit improvement programme
progressing fast
0
50
100
150
200
250
Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115
3
EUR million
Full impact of the programme is expected by the end
of 2014 as compared with the Q2/13 results
78%
achieved
in Q1/14 EUR 200m of
annualised
fixed and
variable cost
savings
| © UPM
Profitability improvement programme
visible in operating profit
0
50
100
150
200
250
300
Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114
Operating profit excluding special items
4
196 7.9%
144 5.8%
EUR million
| © UPM
0
50
100
150
200
250
300
350
400
EBITDA
Q1/13
EBITDA
Q1/14
EBITDA in Q1 2014 vs. Q1 2013
Raflatac
Paper
Asia Other
operations
and
eliminations
Energy
Biorefining Paper
ENA
Plywood
0
50
100
150
200
250
300
350
400
EBITDA
Q1/13
EBITDA
Q1/14
EUR million
Prices,
currency
Variable
costs
Fixed
costs
Deliveries
Significant cost savings
Currencies and paper prices had a
negative impact EUR million
Significant improvement in UPM Paper ENA
UPM Biorefining lower due to maintenance
and currencies
5
284 11.5%
313 12.6%
Eliminations
284 11.5%
313 12.6%
| © UPM
Operating profit *) by business area
6
0
2
4
6
8
10
0
10
20
30
40
50
Q312
Q412
Q113
Q213
Q313
Q413
Q114
0
4
8
12
16
20
0
20
40
60
80
100
Q312
Q412
Q113
Q213
Q313
Q413
Q114
0
10
20
30
40
50
0
20
40
60
80
100
Q312
Q412
Q113
Q213
Q313
Q413
Q114
0
2
4
6
8
10
0
10
20
30
40
50
Q312
Q412
Q113
Q213
Q313
Q413
Q114
-4
-2
0
2
4
6
-40
-20
0
20
40
60
Q312
Q412
Q113
Q213
Q313
Q413
Q114
-3
0
3
6
9
12
-5
0
5
10
15
20
Q312
Q412
Q113
Q213
Q313
Q413
Q114
EURm % of sales UPM Paper Asia EURm % of sales UPM Paper ENA EURm % of sales UPM Plywood
EURm % of sales UPM Raflatac EURm % of sales UPM Energy EURm % of sales UPM Biorefining
*) excluding special items
| © UPM
Strong cash flow
7
0
200
400
600
800
1 000
1 200
1 400
Q10
8
Q30
8
Q10
9
Q30
9
Q11
0
Q31
0
Q11
1
Q31
1
Q11
2
Q31
2
Q11
3
Q31
3Operating cash flow
Cash flow
after investing
activities
EUR million Cash flow, trailing 12 months
• Q1 2014 operating cash
flow was EUR 264m (103m)
• Last 12 months’ operating
cash flow was EUR 896m
(925m)
| © UPM
Further strengthening balance sheet
8
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
2008
2009
2010
2011
2012
2013
2014
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
Net debt, EUR million Net debt / EBITDA (trailing 12 months)
Net debt
Net debt / EBITDA
2.4
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
2008
2009
2010
2011
2012
2013
2014
20
30
40
50
60
70
80
90
Net debt, EUR million Gearing %
Net debt
Gearing
37
Liquidity was EUR 2.0bn at the end of Q1 2014
Repayments total EUR 0.5bn in 2014
| © UPM
UPM business outlook for H1 2014
is broadly stable *)
*) See complete wording of the "Outlook"
in the Q1 2014 interim report
• In H1 2014, UPM’s performance is expected to be underpinned by stable overall outlook for UPM Energy, UPM Raflatac, UPM Paper Asia and UPM Plywood, compared with H2 2013.
• Profitability of UPM Paper ENA is expected to improve due to the on-going cost reduction measures. In H1 2014 compared with H2 2013, performance is negatively impacted by lower delivery volumes, including seasonal factors.
• In UPM Biorefining, capacity additions in the global pulp market are expected to impact on the pulp market balance as the year progresses.
| © UPM 9
| © UPM
Progress in the growth projects targeting
EUR 200m of additional EBITDA
Decisions in 2014
• Changshu labelling materials, 360,000t, start-up by the end of 2015
• Kymi pulp mill expansion, 170,000t, start-up by the end of 2015
• 50% increase in self-adhesive labelstock coating capacity in APAC,
start-up by the end of 2014
Continued implementation
• Lappeenranta renewable diesel, 100,000t start-up summer 2014
• Pietarsaari pulp mill expansion, 70,000t, start-up summer 2014
Further debottlenecking potential at Fray Bentos and Kaukas pulp mills
Targeted additional EBITDA EUR 200m when all projects in full
operation, total capex estimate EUR 680m over three years
10
| © UPM
Low investment needs in existing assets allow
growth projects with modest total capex
11
0
200
400
600
800
1 000
1 200
2008 2009 2010 2011 2012 2013 2014e
EUR million
Operational investments
329
Capital expenditure
Strategic investments
Depreciation
Uruguay
acquisition
Myllykoski
acquisition
450
Estimate
| © UPM
Summary
• Strong Q1 2014 results thanks to fast implementation
of the profit improvement programme
• Strong cash flow and further strengthening balance
sheet
• Solid progress in growth projects
12
| © UPM
Profit
improvement
programme
EUR 200m
Shifting gear in UPM transformation
13
UPM
Biorefining
UPM
Paper
Asia
UPM
Raflatac
UPM
Energy
UPM
Paper
ENA
UPM
Plywood
EBITDA target for
growth initiatives
EUR 200m
Biofuels:
Lappeenranta
biorefinery
Pulp: 10%
capacity increase
Labelling materials
Changshu expansion
Self-adhesive labels:
advancing in growth
markets and in higher
value added products
Business portfolio
development and
value creation
BIOCHEMICALS
BIOCOMPOSITES
BIOFUELS
New businesses
FINANCIALS Q1 2014
| © UPM
Q1 2014 key figures
EUR million Q1 2014 Q1 2013 Q4 2013 2013
Sales 2,481 2,474 2,588 10,054
sales growth, % +0% -5% -3% -4%
EBITDA 313 284 302 1,155
% of sales 12.6 11.5 11.7 11.5
Operating profit *) 196 144 207 683
Profit before tax *) 176 129 188 610
Earnings per share, EUR *) 0.27 0.18 0.27 0.91
Operating cash flow 264 103 262 735
Net debt 2,777 3,199 3,040 3,040
Gearing % 37 42 41 41
16
*) excluding special items
| © UPM
Cash flow
EUR million Q1/14 Q1/13 Q4/13 2013
EBITDA 313 284 302 1,155
Cash flow before change in working capital 297 234 289 1,085
Change in working capital 1 -96 57 -128
Finance costs and income taxes -34 -35 -84 -222
Net cash from operating activities 264 103 262 735
Capital expenditure -68 -98 -91 -337
Asset sales and acquisitions 69 -7 55 40
Cash flow after investing activities 265 -2 226 438
17
| © UPM
Maturity profile and liquidity
18
0
100
200
300
400
500
600
700
800
900
1 000
2014
2015
2016
2017
2018
2019
2020-2
026
2027
2028
2029
2030
EUR million
0
100
200
300
400
500
600
700
800
900
1 000
2014
2015
2016
2017
2018
2019
2020-2
026
2027
2028
2029
2030
EUR million
Liquidity
Liquidity on 31 March 2014 was EUR 2.0bn
(cash and unused credit facilities)
• syndicated credit facility EUR 500 million
• bilateral committed credit facilities EUR 525 million
Committed credit facilities EUR 1.025bn
Maturity profile of outstanding debt Committed credit facilities’ maturities
| © UPM
UPM Biorefining Q1 2014 vs. Q1 2013
19
0
20
40
60
80
100
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
0
4
8
12
16
20
Q1 2014 496 Q1 2013 495
Sales EUR million
-14 Q1 2014 56 Q1 2013 70
Operating profit excluding special items
EUR million
Operating profit EUR million*)
*) excluding special items
EUR million
% of sales Business performance
• Operating profit decreased mainly due
to a scheduled maintenance shutdown
at the UPM Kaukas pulp mill. Higher
delivery volumes and lower variable
costs offset the impact of adverse
currency development.
• Pulp deliveries increased by 3% to
816,000 tonnes (790,000).
0%
| © UPM
UPM Energy Q1 2014 vs. Q1 2013
20
0
20
40
60
80
100
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
0
10
20
30
40
50
Q1 2014 124 Q1 2013 132
Sales EUR million
1 Q1 2014 56 Q1 2013 55
Operating profit excluding special items
Operating profit EUR million*)
*) excluding special items
EUR million
Business performance
• Operating profit increased slightly as
the decrease in costs offset the impact
of lower average sales prices.
• The average electricity sales price
decreased by 2% to EUR 45.8/MWh
(46.8/MWh).
-6%
EUR million % of sales
| © UPM
UPM Raflatac Q1 2014 vs. Q1 2013
21
0
10
20
30
40
50
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
0
2
4
6
8
10
Q1 2014 300 Q1 2013 299
Sales EUR million
2 Q1 2014 20 Q1 2013 18
Operating profit EUR million*)
Operating profit excluding special items
EUR million
Business performance
• Operating profit increased mainly due
to higher delivery volumes and lower
fixed costs, more than offsetting the
negative currency impact.
*) excluding special items
1%
EUR million % of sales
| © UPM
UPM Paper Asia Q1 2014 vs. Q1 2013
22
0
10
20
30
40
50
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
0
3
6
9
12
15
Q1 2014 277 Q1 2013 277
Sales EUR million
Q1 2014 25 Q1 2013 22
Operating profit EUR million*)
*) excluding special items
Operating profit excluding special items
EUR million
Business performance
• Operating profit increased mainly due
to lower variable and fixed costs.
• Average sales prices were lower mainly
due to negative currency impact.
• Paper deliveries increased by 2% to
347,000 tonnes (339,000).
0% 3
EUR million % of sales
| © UPM
UPM Paper ENA Q1 2014 vs. Q1 2013
23
-40
-20
0
20
40
60
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
-4
-2
0
2
4
6
Q1 2014 1,334 Q1 2013 1,365
Sales EUR million
79 Q1 2014 42 Q1 2013 -37
Operating profit excluding special items
Operating profit EUR million*)
*) excluding special items
EUR million
-2%
Business performance
• Operating profit increased mainly due to
lower variable and fixed costs, partly driven
by the ongoing profit improvement
programme.
• The average price for all paper deliveries in
euros was approximately 2% lower than
last year.
• Paper deliveries were 2,148,000 tonnes
(2,139,000).
EUR million % of sales
| © UPM
UPM Plywood Q1 2014 vs. Q1 2013
24
-5
0
5
10
15
20
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
-3
0
3
6
9
12
Q1 2014 114 Q1 2013 108
Sales EUR million
7 Q1 2014 11 Q1 2013 4
Operating profit excluding special items
Operating profit EUR million*)
6% EUR
million
Business performance
• Operating profit improved due to improved
sales margin resulting from higher sales
prices and a favourable sales mix, as well
as lower variable unit costs.
• Deliveries increased by 1% to 188,000
cubic metres (186,000).
*) excluding special items
EUR million % of sales
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