Consumables

UPM reports strong year of recovery

Wednesday 02. February 2011 - Financial Statements 2010

UPM reports strong year of recovery
Financial Statements 2010
October-December 2010:
Earnings per share were EUR 0.28 (0.57), excluding special items EUR 0.27 (0.21)
Operating profit excluding special items was EUR 212 million (186 million)
Continued sales growth driven by prices and volume
Strong cash flow momentum – best quarter in 2010
EBITDA negatively impacted by higher than average maintenance and other costs
January-December 2010:
Earnings per share grew to EUR 1.08 (0.33), excluding special items to EUR 0.99 (0.11)
Operating profit excluding special items was EUR 731 million (270 million)
Solid top-line recovery – sales increased by 16%
Net debt down by EUR 444 million
Board’s proposal for dividend per share EUR 0.55 (0.45)
Key figures
Q4/2010
Q4/2009
Q1-Q4/2010
Q1-Q4/2009
Sales, EURm
2,357
2,108
8,924
7,719
EBITDA, EURm 1)
318
362
1,343
1,062
% of sales
13.5
17.2
15.0
13.8
Operating profit (loss), EURm
207
126
755
135
excluding special items, EURm
212
186
731
270
% of sales
9.0
8.8
8.2
3.5
Profit (loss) before tax, EURm
173
311
635
187
excluding special items, EURm
178
156
611
107
Net profit (loss) for the period, EURm
144
295
561
169
Earnings per share, EUR
0.28
0.57
1.08
0.33
excluding special items, EUR
0.27
0.21
0.99
0.11
Operating cash flow per share, EUR
0.66
0.71
1.89
2.42
Shareholders’ equity per share at end of period, EUR
13.64
12.67
13.64
12.67
Gearing ratio at end of period, %
46
56
46
56
Net interest-bearing liabilities at end of period, EURm
3,286
3,730
3,286
3,730
1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets, excluding the share of results of associated companies and joint ventures, and special items.
Jussi Pesonen, President and CEO, comments:
“The year 2010 was characterised by recovering demand and global commodity price inflation. With higher production volumes we were able to take full benefit of our early efficiency improvements and bring profitability back to pre-recession level. This is a remarkable achievement in the continuously challenging operating environment. Our last quarter profitability was burdened by higher than average maintenance and other costs but showed the best cash flow for the whole year.
Our Pulp, Energy and Label businesses excelled in 2010, whereas the profitability of the Paper business was weak. Paper deliveries increased, but the business made operating loss due to significantly higher fibre costs. The European paper business clearly needs consolidation to be able to improve its cost structure. Therefore, the Myllykoski acquisition is a major strategic opportunity for our company.
As for 2011, we remain clearly positive. Stable demand and moderating cost inflation provide a good foundation for further profit improvement. Also our Paper business has a positive view of this year. The price increases we achieved at the beginning of the year will support the necessary margin recovery and to catch up last year’s cost development,” says Pesonen.
Outlook for 2011
Economic indicators point to continued economic growth, although in the mature European and North American markets, growth is expected to be slow. Robust economic growth is expected to continue in emerging markets. This is also likely to maintain demand and prices for various global commodities at a high level.
For the Group, delivery volumes overall are expected to either remain stable or increase in 2011. Variable cost inflation is expected to moderate from the pace seen in 2010. Sales prices of UPM’s products are expected to increase, especially in the Paper business, where the average price is expected to increase by about 6%at the beginning of the year from the fourth quarter of 2010.
UPM operating profit, excluding special items, for 2011 is expected to improve from last year.
In the first half of 2011, operating profit, excluding special items, is expected to be clearly higher than that of the first half of 2010.
Capital expenditure, excluding acquisitions, for 2011 is forecast to be about EUR 300 million.
Dividend for 2010
The Board of Directors will propose to the Annual General Meeting, to be held on 7 April 2011, that a dividend of EUR 0.55 per share be paid in respect of the 2010 financial year (EUR
0.45). It is proposed that the dividend be paid on 20 April 2011.
New disclosure procedure
UPM follows the new disclosure procedure enabled by the Finnish Financial Supervisor Authority (Standard 5.2b) and hereby publishes its Financial Review enclosed as a PDF file to this stock exchange release