Higher selling prices enabled Finnish paper group UPM to offset the increase in production costs in the first quarter and retain financial results broadly on par with the same quarter of the previous year. For the first three months of 2022, the company posts an operating profit of €183m (Q1 2021: €279m) and comparable EBIT of €277m (€279m). Sales for the period increased to €2.51bn (€2.23bn), yielding a net profit of €139m (€227m) for the quarter. UPM’s Communication Papers division, which was particularly affected by the strike, could still turn around the previous year’s operating loss of €102m for the corresponding quarter into an operating profit of €86m. Operating profit of the Fibre division, also hit by the strike, receded to €37m (€209m).
For UPM as well as other companies of the industry, the strike at Finnish mills from the beginning of the year as well as the extraordinary increase in input costs, especially energy, were significant market developments. The costs burdened Communication Papers, UPM’s biggest division, but their impact could be more than offset by increasing market prices accordingly. Although as much as third of UPM’s entire production capacity for printing and writing paper were affected by the strike, diminishing paper deliveries by over 300,000 t, the company could cover at least part of the shortfall from existing stock and mills outside Finland.
Two thirds of UPM’s pulp production were also paralysed by the strike virtually halving the company’s pulp deliveries and sales. Here too, higher market prices stemmed the loss in earnings but the quarterly results of UPM Fibres significantly receded from €209m to €37m.
Strike resolved with both sides claiming goals achieved
The strike at UPM ended on 22 April after the negotiating parties agreed on industry-specific wage tariff agreements. UPM’s Pulp, Communication Papers, Specialty Papers, Raflatac as well as Biofuels were affected by the strike, the company writes. Normal operations at the affected mills are being restored, the company reported on 26 April. The company’s plywood mills and sawmills reportedly operated normally over the entire quarter, UPM adds. UPM says it achieved its negotiating goals viz. to conclude business-specific wage tariff agreements, commenting on the results. The new agreements would improve the flexibility of the individual business units. The Finnish trade union likewise claims achieving its principal objective in the negotiations from its perspective, i.e. to prevent implicit salary cuts by increasing working hours without compensation.
The war in Ukraine, the ongoing pandemic, uncertain growth in the European and global economy, the energy market situation in Europe as well as the tight raw material and logistics markets pose significant uncertainties for the remainder of the year. UPM, however, expects demand to be healthy in the ongoing year for most of its products.
Higher selling prices enabled Finnish paper group UPM to offset the increase in production costs in the first quarter and retain financial results broadly on par with the same quarter of the previous year. For the first three months of 2022, the company posts an operating profit of €183m (Q1 2021: €279m) and comparable EBIT of €277m (€279m). Sales for the period increased to €2.51bn (€2.23bn), yielding a net profit of €139m (€227m) for the quarter. UPM’s Communication Papers division, which was particularly affected by the strike, could still turn around the previous year’s operating loss of €102m for the corresponding quarter into an operating profit of €86m. Operating profit of the Fibre division, also hit by the strike, receded to €37m (€209m).
For UPM as well as other companies of the industry, the strike at Finnish mills from the beginning of the year as well as the extraordinary increase in input costs, especially energy, were significant market developments. The costs burdened Communication Papers, UPM’s biggest division, but their impact could be more than offset by increasing market prices accordingly. Although as much as third of UPM’s entire production capacity for printing and writing paper were affected by the strike, diminishing paper deliveries by over 300,000 t, the company could cover at least part of the shortfall from existing stock and mills outside Finland.
Two thirds of UPM’s pulp production were also paralysed by the strike virtually halving the company’s pulp deliveries and sales. Here too, higher market prices stemmed the loss in earnings but the quarterly results of UPM Fibres significantly receded from €209m to €37m.
Strike resolved with both sides claiming goals achieved
The strike at UPM ended on 22 April after the negotiating parties agreed on industry-specific wage tariff agreements. UPM’s Pulp, Communication Papers, Specialty Papers, Raflatac as well as Biofuels were affected by the strike, the company writes. Normal operations at the affected mills are being restored, the company reported on 26 April. The company’s plywood mills and sawmills reportedly operated normally over the entire quarter, UPM adds. UPM says it achieved its negotiating goals viz. to conclude business-specific wage tariff agreements, commenting on the results. The new agreements would improve the flexibility of the individual business units. The Finnish trade union likewise claims achieving its principal objective in the negotiations from its perspective, i.e. to prevent implicit salary cuts by increasing working hours without compensation.
The war in Ukraine, the ongoing pandemic, uncertain growth in the European and global economy, the energy market situation in Europe as well as the tight raw material and logistics markets pose significant uncertainties for the remainder of the year. UPM, however, expects demand to be healthy in the ongoing year for most of its products.
