Upm-kymmene Oyj · OMXHEX:UPM
Upm-kymmene Oyj — Q3 2024 Earnings Presentation
26 slides from Upm-kymmene Oyj's earnings presentation, Oct 29, 2024
Slide 1: UPM Interim Report Q3 2024
UPM Interim Report Q3 2024 Massimo Reynaudo President and CEO 29 October 2024 1
Slide 2: Q3 2024: Comparable EBIT +32% from last year in a challenging market
Q3 2024: Comparable EBIT +32% from last year in a challenging market Comparable EBIT Q3 2024 in brief EURm 800 • Sales decreased by 2% to EUR 2,521 million (2,584 million in Q3 2023) 700 • Comparable EBIT increased by 32% to 600 EUR 291 million, 11.5% of sales 500 (220 million, 8.5%) 400 • Demand re
Slide 3: Demand for UPM products slowed down in Q3 after encouraging start of the year
Demand for UPM products slowed down in Q3 after encouraging start of the year Cautious consumers Cautious consumers Active consumers Low construction Soft markets for pulp Weak renewable fuels and fine papers during Modest demand the summer growth for UPM Demand slowed from products strong start of
Slide 4: Comparable EBIT in Q3 2024
Comparable EBIT in Q3 2024 EURm EURm 291 291 11.5% 11.5% 220 8.5% 182 7.2% 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: Strong financial position
Strong financial position Net debt Net debt Net debt/ EURm and leverage EBITDA (x) 4 500 3,0 • Net debt EUR 2,804m at the end of Q3 2024 3 750 2,5 • Net debt / EBITDA 1.59 3 000 2,0 Policy: ≤ 2x • Cash funds and committed credit facilities 2 250 1,5 EUR 3.7bn at the end of Q3 2024 1 500 1,0 • No fin
Slide 7: Outlook for 2024
Outlook for 2024 • UPM’s comparable EBIT in Q4 2024 is expected to be on similar level or increase from Q4 2023 (EUR 323 million). • UPM’s comparable EBIT in full-year 2024 is expected to be on similar level or increase from 2023. 7 | © UPM
Slide 8: Our business portfolio, leveraging the competitive business platforms
Our business portfolio, leveraging the competitive business platforms UPM portfolio provides growth in Decarbonisation solutions – Decarbonisation solutions: Advanced biochemicals, biofuels, CO2-free energy materials – Advanced materials: adhesive materials, specialty papers, Renewable plywood fibre
Slide 9: Decarbonisation solutions: Launch, scale up, maximise value
Decarbonisation solutions: Launch, scale up, maximise value TODAY ACCELERATING NEXT GROWTH PERFORMANCE STEPS • Low electricity prices • Maximise value on the • Heating, data centers, during the summer electricity markets traffic, industrial decarb • Weak renewable fuels • Biofuels turnaround • Entry
Slide 10: Advanced materials: Strengthen competitiveness to accelerate growth
Advanced materials: Strengthen competitiveness to accelerate growth TODAY ACCELERATING NEXT GROWTH PERFORMANCE STEPS • Slow recovery in demand • Simplification • Capture the market recovery in volumes • Lower performance in • Productivity Raflatac and Specialty improvement • Organic growth Papers •
Slide 11: Renewable fibres: Capture the full benefit of the Uruguay investment, optimize in Finland
Renewable fibres: Capture the full benefit of the Uruguay investment, optimize in Finland TODAY ACCELERATING NEXT GROWTH PERFORMANCE STEPS • Soft pulp market during • Optimize in Uruguay • Expand in Uruguay to the summer for maximum returns full potential • World-class low-cost • Railway to full use
Slide 12: Graphic papers: Strong cash flow generation continues
Graphic papers: Strong cash flow generation continues TODAY ACCELERATING PERFORMANCE • Stable demand YTD • Closure of Nordland Papier PM3 in Q4 • Profitability and deliveries • Optimise product, service mix recovered from Q2 • Disciplined cost management • Closure of Hürth newsprint • Focus on free
Slide 13: Priority to improve competitiveness and performance – this supports our growth ambition
Priority to improve competitiveness and performance – this supports our growth ambition 13 | © UPM
Slide 14: Summary
Summary • UPM improved its Q3 comparable EBIT by 32% • UPM Paso de los Toros in full production • Demand recovery slowed down after encouraging start of the year • Priority to further improve competitiveness and performance • Setting up to capture the recovery and future growth in our product market
Slide 15: UPM Biofore – Beyond Fossils
UPMBIOFORE % BEYOND FOSSILS sf
Slide 16: 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 4 500 3,0 2 000 Target: EBIT growth 12 3 750 2,5 1 800 Target: 10% 1 600 10 3 000 2,0 1 400 Policy: ≤ 2x 8 1 200 2 250 1,5 1 000 6 800 1 500 1,0 600 4 400 7
Slide 17: 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 18: Major investment cycle coming to an end
Major investment cycle coming to an end EURm Capital expenditure Estimate 1 600 1 400 Capex 2024 estimate 1 200 Transformative investments • Total EUR 550m 1 000 • Includes EUR 300m on the 800 UPM Leuna biochemicals 600 Depreciation project in Germany 400 Strategic investments • Operational investme
Slide 19: 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 20: Maturity profile and liquidity
Maturity profile and liquidity EURm Liquidity on 30 September 2024 was EUR 3.7bn 2 000 (cash funds and unused committed credit facilities) 1 500 UPM’s committed credit facilities: • EUR 159m rolling committed overdraft facility 1 000 maturing 2025 • EUR 400m bilateral revolving credit facilities (EU
Slide 21: UPM's main currency exposures
UPM’s main currency exposures • Key currency exposures USD, GBP and JPY • Policy to hedge an average of 50% of the estimated net currency cash flow for the next 12 months Estimated annual foreign currency net cash flow, before hedging USD GBP JPY Others EURm 1,290 230 120 10 21 | © UPM
Slide 22: 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 23: 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 Helsinki Front Year System Front Year UPM average sales price UPM Energy 2019 2020 2021 2022 2023 9M/2024 profitability Comparable EBI
Slide 24: 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 25: 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 25 | © UPM
Slide 26: UPM Biofore – Beyond Fossils
UPMBIOFORE *4 BEYOND FOSSILS