UPM pulp stands out with 22% EBITDA margin

Finnish wood, pulp and bioenergy group UPM Kymmene, Helsinki, achieved a turnover of € 10.1 billion last year – 4.2% less than in 2012. The operating profit, on the other hand, amounted to € 548 million posting a result clearly in the black again after 2012 had seen losses of € 1.3 billion due to restructuring measures.

The restructuring is also reflected in the reporting. Until last year, the Division "Forest and Timber" was regular part of the report. Meanwhile, solid wood processing has submerged in the business area "Biorefining", which also contains pulp production. Biorefining has performed exceptionally well. Although sales rose by only 0.9% to € 1.99 billion, net income before interest, taxes, depreciation and amortization (EBITDA) rose by 11.3 % to € 435 million. The EBITDA margin is at 22 %. Operating profits jumped by 49% to € 305 million. The majority of that can be accredited to pulp production. Forest and Timber reached an EBITDA margin of only 0.8 %, according to the latest figures available. In addition, the solid wood sector was reduced last year. In July, UPM sold its Pestovo sawmill in Russia. The French planing mill in Aigrefuille was sold in October. Another indication of the declining importance of sawmilling for UPM is the annual balance sheet – unintentionally: In the 26-page report only eight lines touch upon the issue of solid wood processing.

UPM's plywood division followed a positive trend in 2013: Sales rose by 9.2% to € 429 million. The operating result increased by € 500,000 to € 4.9 million. Construction activity in Europe picking up and reduced imports due to supply problems from overseas have led to a balanced plywood market, according to UPM.