Profits at Finnish paper firm UPM have more than halved in the first half of 2012 compared with the same period last year.
UPM, which is one of the UK’s biggest recyclers, said in its interim half year report, that net profits for January-June 2012 were €204m (£160m), down from €464m in 2011. Its Q2 profits fell from €295m last year to €87m this year.
However, the company said sales had increased 9% between HY1 2011 and 2012 due to the acquisition of Myllykoski in August 2011.
The firm said earnings were down mainly due to falling demand and falling returns on pulp sales.
Other key results include:
Q2/2012 (2011 in brackets)
- Earnings per share excluding special items were €0.14 (€0.26), and reported €0.17 (€0.56)
- EBITDA was €316m, 12.1% of sales (€372m, 15.4% of sales)
- EBITDA was affected by seasonally higher fixed costs and fair value losses of cash flow hedges
- Net debt decreased by €71m to €3,385m after the dividend payment and asset sales
- Earnings per share excluding special items were €0.36 (€0.58), and reported €0.39 (€0.89)
- EBITDA was €663m, 12.7% of sales (€751m, 15.7% of sales)
- EBITDA increased from H2 2011 driven by improved profitability of UPM’s businesses
- Operating cash flow was €343m (€446m), after restructuring payments of €140m
In the paper division, operating profit for HY1 excluding special items was €19m, compared with a loss of €23m in 2011. Paper deliveries rose by 7% to 5.25m tonnes, with most of the increase accounted for by the acquisition of Myllykoski.
While fibre and fixed costs fell, this was largely offset by lower delivery volumes.