Upm-kymmene Oyj · OMXHEX:UPM
Upm-kymmene Oyj — Q4 2024 Earnings Presentation
32 slides from Upm-kymmene Oyj's earnings presentation, Feb 5, 2024
Slide 1: UPM financial statements release 2024
UPM financial statements release 2024 Massimo Reynaudo President and CEO 5 February 2025 1
Slide 2: Decisive actions to improve performance, accelerate growth and deliver value
Decisive actions to improve performance, accelerate growth and deliver value Full year 2024 – performance improved from 2023 • Comparable EBIT increased by 21% to EUR 1,224 million (1,013 million) • Good contribution from UPM Paso de los Toros • Moderate improvement in advanced materials deliveries
Slide 3: Q4 2024: decisive actions to improve performance, accelerate growth and deliver value
Q4 2024: decisive actions to improve performance, accelerate growth and deliver value Comparable EBIT Q4 2024 in brief EURm 800 • Sales increased by 4% to EUR 2,632 million (2,531 million in Q4 2023) 700 • Comparable EBIT increased by 29% to 600 EUR 418 million, 15.9% of sales 500 (323 million, 12.8
Slide 4: Comparable EBIT in Q4 2024
Comparable EBIT in Q4 2024 EURm EURm 450 418 450 418 15.9% 15.9% 400 400 323 350 12.8% 350 291 11.5% 300 300 250 250 200 200 150 150 100 100 50 50 0 0 4 | © UPM
Slide 5: Comparable EBIT by business area
Comparable EBIT by business area EURm UPM Fibres *) % of sales EURm UPM Communication Papers % of sales EURm UPM Specialty Papers % of sales 320 40 300 25 80 24 280 35 70 21 240 20 240 30 60 18 200 25 180 15 50 15 160 20 40 12 120 15 120 10 30 9 80 10 20 6 60 5 40 5 10 3 0 0 0 0 0 0 -40 -5 -60 -5 EU
Slide 6: Solid financial position
Solid financial position Net debt Net debt Net debt/ EURm and leverage EBITDA (x) 5 000 3,0 • Net debt EUR 2,869m at the end of 2024 2,5 • Net debt / EBITDA 1.66 4 000 2,0 • Cash funds and committed credit facilities 3 000 Policy: ≤ 2x EUR 3.2bn at the end of 2024 1,5 • No financial covenants 2 000
Slide 7: Outlook
Outlook (* • Profit guidance: UPM’s comparable EBIT in H1 2025 is expected to be approximately in the range of EUR 400-625 million (EUR 515 million in H1 2024). • Outlook: UPM’s performance in H1 2025 is expected to benefit from higher delivery volumes and lower fixed costs, but be held back by lowe
Slide 8: UPM Biorefining in 2024
UPM Biorefining in 2024 • Biofuels in 2024 impacted by the downturn in the advanced fuels markets, while variable costs decreased with a delay. Performance is expected to improve in H1 2025 compared with H1 2024 (* • Biochemicals had all teams, business processes and systems in place ahead of start-
Slide 9: Fair value changes and impairments in Q4 2024
Fair value changes and impairments in Q4 2024 • The fair value of Finnish forests increased by EUR 105m, due to higher wood price estimates • Impairment of EUR 113m on goodwill of Finnish Pulp operations, due to high wood costs • Impairment of EUR 373 million on the Leuna biorefinery assets resultin
Slide 10: We act on three fronts
We act on three fronts 1. Improve overall performance 2. Accelerate growth in targeted areas 3. Opportunities in business portfolio 10 | © UPM
Slide 11: Communication papers: Strong cash flow generation continues
Communication papers: Strong cash flow generation continues FOCUS ON PERFORMANCE AND CASH FLOW • Optimise product and service mix, commercial strategy Free cash flow / CE • Disciplined cost management 22% • Closure of Nordland Papier fine paper PM3 in Q4 in 2024 • Closure of Hürth newsprint mill in
Slide 12: Renewable fibres: Capture the full potential in Uruguay
Renewable fibres: Capture the full potential in Uruguay, streamlined operating model in Finland URUGUAY FINLAND • Full production in 2025 in UPM • Wood market continues tight Paso de los Toros will add • New streamlined operating approx. 300,000 tonnes of pulp (* model established to optimize • Full
Slide 13: Advanced materials: Strengthen competitiveness to accelerate growth
Advanced materials: Strengthen competitiveness to accelerate growth RAFLATAC SPECIALTY PAPERS PLYWOOD • Strong global #2 • Strong global #1 • #1 in Europe, globally in LNG plywood • Sharpen competitiveness • Sharpen competitiveness and global scale • Sharpen competitiveness • Expand in faster growin
Slide 14: UPM Raflatac becomes a significant player in the Graphics market
UPM Raflatac becomes a significant player in the Graphics market • UPM is targeting a leading global position in the Graphic materials market • Fast-growing, high value-added market segment, adjacent to self-adhesive label materials • Entry and scaling-up through acquisitions: AMC, Germany in 2022,
Slide 15: Decarbonisation solutions: Turn-around, business launch, maximize value
Decarbonisation solutions: Turn-around, business launch, maximize value BIOFUELS BIOCHEMICALS ENERGY • Aim to turn-around the • Commercial interest • Maximize value in the profitability confirmed with customer volatile electricity agreements markets • Decreasing variable costs • UPM Leuna sequential
Slide 16: UPM Leuna biorefinery is in sequential start-up
UPM Leuna biorefinery is in sequential start-up – corrective works identified in the sugars-to-chemicals process 16 | © UPM
Slide 17: Shaping the business portfolio is an ongoing strategic process
Shaping the business portfolio is an ongoing strategic process Decarbonisation UPM Fibres: #3 globally with strong growth solutions platform in South America Advanced materials UPM Raflatac #2, UPM Specialty Papers #1 globally, ambition to grow organically and through M&A Renewable fibres Biofuels t
Slide 18: The Board proposes a dividend of EUR 1.50 per share and initiates share buybacks
The Board proposes a dividend of EUR 1.50 per share and initiates share buybacks EUR Dividend % of Dividend policy per share comparable EPS • UPM aims to pay attractive dividends, 1,60 100 targeting at least half of the comparable 1,40 90 earnings per share over time 1,20 80 Dividend proposal for 20
Slide 19: Summary
Summary • UPM performance improved in 2024 from 2023 • We act on three fronts 1. Improve overall performance 2. Accelerate growth in targeted areas 3. Opportunities in business portfolio • The Board proposes a dividend of EUR 1.50 per share and initiates share buybacks 19 | © UPM
Slide 20: UPM Biofore - Beyond fossils
UPMBIOFORE % BEYOND FOSSILS sf
Slide 21: Group financial performance and targets
Group financial performance and targets EURm Comparable EBIT % Comparable ROE Net debt Net debt Net debt/ EURm and leverage EBITDA (x) 2 200 14 3,0 5 000 2 000 Target: EBIT growth 12 4 500 2,5 1 800 Target: 10% 4 000 1 600 10 3 500 2,0 1 400 Policy: ≤ 2x 8 3 000 1 200 2 500 1,5 1 000 6 800 2 000 1,0
Slide 22: Business area long-term return targets
Business area long-term return targets UPM UPM UPM UPM Communication UPM Energy Fibres Specialty Papers Papers Plywood UPM Raflatac 30 30 30 30 30 30 28 ROCE % *) 28 ROCE % **) 28 ROCE% 28 FCF/CE % 28 ROCE % 28 ROCE % 26 26 26 26 26 26 24 24 24 24 24 24 22 22 22 22 22 22 20 20 20 20 20 20 18 18 18 1
Slide 23: Comparable EBIT in 2024 vs. 2023
Comparable EBIT in 2024 vs. 2023 Comparable EBIT EURm 1 600 1 400 1,224 11.8% 1 200 Currency, 1,013 Fixed net impact Depr., 9.7% Prices costs forests, 1 000 plantations, Volumes other 800 600 Variable costs 400 200 0 2023 2024 23 | © UPM
Slide 24: Major investment cycle coming to an end
Major investment cycle coming to an end EURm Capital expenditure Estimate 1 600 1 400 Capex 2025 estimate 1 200 • Capex excl. acquisitions 1 000 EUR 400m 800 • Metamark acquisition 600 Depreciation GBP 146m Strategic investments 400 • Operational investment 200 needs consistently low 0 Operational i
Slide 25: Maintenance shutdowns in 2024 and 2025
Maintenance shutdowns in 2024 and 2025 Timing Unit Q1-Q2 24 Olkiluoto nuclear power plant OL3 Maintenance shutdowns have Q2 24 Olkiluoto nuclear power plant OL1 and OL2 an impact on UPM Paso de los Toros pulp mill • Maintenance costs UPM Fray Bentos pulp mill • Production volumes UPM Pietarsaari pul
Slide 26: Maturity profile and liquidity
Maturity profile and liquidity EURm Liquidity on 31 December 2024 was EUR 3.2bn 2 000 (cash funds and unused committed credit facilities) 1 500 UPM’s committed credit facilities: • EUR 160m rolling committed overdraft facility 1 000 maturing 2026 • EUR 400m bilateral revolving credit facilities (EUR
Slide 27: Demand recovery for UPM products slowed down in H2 2024
Demand recovery for UPM products slowed down in H2 2024 Cautious consumers Cautious consumers Low construction Active consumers Somewhat improving Weak renewable fuels pulp and fine paper Modest demand markets in Q4 after Demand recovery growth for UPM weak Q3 slowed down in H2 for products most UPM
Slide 28: Chemical pulp market prices
UPM Fibres Chemical pulp market prices Pulp market prices, EUR Pulp market prices, USD EUR/tonne USD/tonne 1700 1700 1500 1500 1300 1300 1100 1100 900 900 700 700 500 500 300 300 BHKP, Europe NBSK, Europe BHKP, Europe, EUR NBSK, Europe, EUR BHKP, China NBSK, China BHKP, China, EUR NBSK, China, EUR S
Slide 29: Electricity market prices
UPM Energy Electricity market prices Market electricity prices vs UPM sales price EUR/MWh 240 220 200 180 160 140 120 100 80 60 40 20 0 2019 2020 2021 2022 2023 2024 2025 Helsinki Front Year System Front Year UPM average sales price UPM Energy 2019 2020 2021 2022 2023 2024 profitability Comparable E
Slide 30: Graphic paper prices
UPM Communication Papers Graphic paper prices Europe North America China EUR/t USD/t USD/t 1300 1700 1400 1200 1600 1300 1500 1100 1200 1400 1000 1300 1100 900 1200 1000 800 1100 900 700 1000 900 800 600 800 500 700 700 400 600 600 300 500 500 WFC r (100% chemical pulp) News SC LWC News SC LWC Uncoa
Slide 31: Paper price vs. cash cost of marginal cost producer
UPM Communication Papers Paper price vs. cash cost of marginal cost producer EUR/t Price Cash cost of a marginal producer 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Sources: PPI, RISI, AFRY 31 | © UPM
Slide 32: UPM Biofore - Beyond fossils
UPMBIOFORE “4 BEYOND FOSSILS sf