UPM 2nd Q 2011 results: operating profit up 42% from 2010 to 289m euros
Q2 2011 compared to Q2 2010
Sales – 2,423m euros, up from 2,216m euros in 2010, mainly due to increased prices, with some increased volumes in external pulp sales, Label, Paper & Plywood
EBITDA – 372m euros, up from 353 euros - Increased sales prices made up for higher variable costs
Increase in fair value of biological assets 11m euros, compared to 31m euros in 2010 – both figures are net of wood harvested
Pre-tax profit – 316m euros, up from 181m euros in 2010
Income taxes – 21m euros, up from 12m euros in 2010
Profit – 295m euros, up from 169m euros in 2010
Earnings/share – 0.56 euros, up from 0.33 euros in 2010
Earnings/share excluding special items – 0.26 euros, compared to 0.29 euros in 2010
H1 2011 compared to H1 2010
Sales – 4,779m euros, up from 4,255m euros in 2010, mainly due to increased prices, with increased volumes in most areas
EBITDA – 751m euros, up from 641m euros in 2010 - Increased sales prices made up for higher variable costs
Operating profit – 487m euros, up from 310m euros in 2010
Increase in fair value of biological assets – 14m euros, compared to 50m euros in 2010 both figures are net of wood harvested
Pre-tax profit – 511m euros, up from 263m euros in 2010
Income taxes – 47m euros, up from 24m euros in 2010
Profit – 464m euros, up from 239m euros in 2010
Earnings/share – 0.89 euros, up from 0.46 euros in 2010
Earnings/share exc special items – 0.58 euros, up from 0.44 euros in 2010
Outlook for 2011
UPM’s operating profit exc special items for 2011 is expected to improve compared to last year. In H2 2011, operating profit exc special items is expected to be around the same level as in H1 2011. The earnings guidance includes the acquired Myllykoski operations.
The broad-based solid demand growth in UPM's products experienced in previous Q’s has flattened. The demand outlook in UPM's products is fairly stable in the H2 2011.
Variable cost increases seem to be slowing and only minor cost increases are expected in H2 2011 compared with H1. Price increases achieved in Q3 in publication papers, self-adhesive label stock and plywood, are expected to offset the increased variable costs.
Capital expenditure, excluding acquisitions, for 2011 is expected to be about 350m euros.
UPM's hydropower generation volume is expected to continue low in the H2 2011, due to currently low water reservoirs in Finland. The average sales price for electricity in H2 of 2011 is expected to be about the same as in H1.
Chemical pulp deliveries in H2 of 2011 are expected to increase slightly from H2 2010. Market prices in USD are expected to fall slightly from the Q2 2011.
Weak market conditions are expected to continue in sawn timber.
In Europe, some seasonal demand increase is anticipated for publication papers in H2 2011, while in fine papers, demand is likely to continue weak. Solid demand is expected in Asia.
UPM has increased prices for newsprint and magazine papers in Europe by around 2% in the beginning of Q3 from Q2. On average, UPM's fine and speciality paper prices are expected to remain about the same in Q3 as in Q2.
Label materials deliveries in H2 2011 are expected to rise slightly from last year. Sales prices in local currencies are expected to increase from Q2.
Variable cost increase is likely to continue.
In Plywood, delivery volumes in H2 2011 are expected to increase from last year. Sales prices are likely to rise from Q2. Demand is expected to remain robust in industrial end-uses. Construction activity in Europe is expected to remain subdued.
BUSINESS AREA REVIEWS
Market review
In January-June, demand for publication papers in Europe was approx the same as the previous year, and for fine papers 5% lower than a year ago. In North America, demand for magazine papers decreased by 5% from last year. In Asia, demand for fine papers grew.
In Europe, publication paper prices rose in H1 by about 11% from the same period the previous year and in Q2 of 2011 by about 1% from Q1 2011.
Fine paper prices increased in H1 by about 10% from the same period last year and in Q2 2011 remained around the same as in the Q1 of 2011.
In North America, the average USD price for magazine papers was 15% higher than last year. In Asia, market prices for fine papers increased during H1.
Posted Date: 04th Aug 2011