EBITDA was Euro 284 million, 11.5% of sales, compared to EBITDA of 357 million, 13.7% of sales in 1Q 2012. The decrease in EBITDA was mainly attributable to the Paper business area, as a result of lower average paper prices and lower delivery volumes.
Fixed costs decreased by Euro 30 million from the comparison period. Also, variable costs were slightly lower than last year.
Operating profit excluding special items was Euro 144 million, 5.8% of sales. Reported operating profit was Euro 81 million, 3.3% of sales. Depreciation totalled Euro 145 million.
Operating profit includes net charges totalling Euro 63 million as special items. The Paper business area recognised charges of Euro 54 million related to the on-going restructuring. Forest and Timber recognised restructuring charges of Euro 2 million in sawn timber operations. Charges of Euro 7 million were recognised in Other operations, mainly related to the streamlining of global functions. The increase in the fair value of biological assets net of wood harvested was Euro 6 million.
Profit before tax was Euro 66 million and excluding special items Euro 129 million. Net interest and other financing costs were Euro 20 million. Exchange rate and fair value gains and losses resulted in a gain of Euro 5 million. Income taxes were Euro 19 million. Special items in taxes were Euro 15 million positive.
Profit for 1Q 2013 was Euro 47 million and earnings per share were Euro 0.09. Earnings per share excluding special items were Euro 0.18. Operating cash flow per share was Euro 0.20 (0.42).
CEO Jussi Pesonen comments on the 1Q 2013:
“The 1Q was well in line with our expectations: steady and positive in our
growth businesses, hard work and continuing challenges in Paper. Our operating
profit excluding special items, at Euro 144 million, materialised close to the
comparison periods (156 million in 1Q 2012, 146 million in 4Q 2012). The
operating cash flow was Euro 103 million, which was impacted by a seasonal
increase in working capital.
The financial result was clearly underpinned by the
continued good performance of Pulp, Energy, and Label. Our Pulp was back to
normal performance and Energy hedging continued to be successful. The performance of Plywood and Timber also
improved thanks to improved cost efficiency and revised commercial strategies.
In Paper, however, the market developments were as challenging as we anticipated. The profitability of European paper business was negatively impacted by three factors: publication paper prices, adverse currency development and delivery volumes compared to the latter half of 2012.
Measures taken in 2012 resulted in Euro 30 million lower fixed costs in the 1Q 2013 compared to last year.The market realities are currently tough and these savings were not sufficient to offset the market impact in Paper. Therefore, we will go ahead with the restructuring and streamlining plans that we announced in January to achieve Euro 90 million annual fixed cost savings. We are permanently closing two magazine paper machines in April, one in Rauma, Finland, and one in Ettringen, Germany. The sale of the Docelles paper mill, the Pestovo sawmill and the Aigrefeuille further processing mill is also ongoing, as is the streamlining of our functions. Economic pressure has led - and we believe will continue to lead - to structural changes that will be important for the whole industry,” said Pesonen.
In 1H 2013, UPM’s performance will be underpinned by continued stable overall outlook for growth businesses such as Energy, Pulp and Label, as compared to 2H 2012. However, slightly lower publication paper prices, adverse currency development and lower delivery volumes are having a clear negative impact on the European paper business profitability, as compared with 2H 2012. UPM’s cost level is expected to be stable.
UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 22,000 people.