UPM reports improved profit

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1 February 2007 — Helsinki (FIN): UPM’s president and CEO, Jussi Pesonen, has said that the company’s operating profit has improved clearly over the last year and the profitability of all business areas has developed well.

2006 sales exceeded €10 billion ($13 billion) and operating profit grew by 30 percent.

 

Operating profit for the year rose to €536 million from €318 million a year earlier. EPS for 2006 were €0.65 compared to €0.5 in 2005.

 

Q4 operating profit was €247 million compared to a loss of €58 million in 2005.

 

In the spring, UPM launched a profitability programme that is said to have improved the company’s competitiveness in the paper industry and laid the foundation for sustainable profitability. The annual cost savings of the programme are estimated to amount to €110 million ($143 million).

 

According to the company, UPM Raflatac developed into a major global business and the reorganisation of the Wood Products Division had a positive impact on the business area’s profitability.

 

Pesonen said: "The year was a turning point for UPM, but the ongoing industry transformation is not over. The forest industry’s business environment will continue to be challenging. Only efficient production and supply can guarantee future success."

 

UPM expects profits to grow between 1 and 2 percent this year despite increases in wood, raw material and energy prices.

 

Pesonen continued: "Demand forecasts are largely positive across the board. Demand for printing papers is forecast to grow somewhat from last year. The strongest growth in demand will be in emerging markets. In North America, weak demand is expected to continue. We expect paper deliveries to increase over last year. Average paper price is slightly higher in the first quarter of 2007 than that of the fourth quarter of 2006."