Paper giant UPM has reported solid results for Q2 with an EBITDA of €372 million despite a challenging cost environment.
EBITDA for Q2 in 2010 stood at €353. Operating profit for this year’s Q2 stood at €289 million compared to €203 million for last year’s Q2.
Looking forward, earnings guidance for 2011 remains unchanged and operating profit is expected to be on the same level as in the first half of 2011.
President and chief executive Jussi Pesonen said UPM was able to offset the rise in variable costs through higher sales prices. He said that the recent purchase of Myllykoski will allow the company to improve its cost competitiveness.
He added: “Market demand seems to have stabilised and cost development is levelling off. In these conditions the best way to make fundamental improvements in terms of profitability is through determined consolidation and restructuring.
“The Myllykoski acquisition gives UPM a unique momentum for profitability improvement. Already, during the initial integration planning, the merits of the transaction have been confirmed.
“As the transaction is completed, UPM now has good prerequisites to maintain its position as the frontrunner in the field.”
However, Pesonen argued that the acquisition could not tackle all the industry challenges. He said: “Within a year we have succeeded in reducing our net debt by €675 million.
“It is testimony of a strong and solid operative cash flow. Our financial flexibility for further strategic manoeuvres is good and we intend to continue implementing strategic steps in our various businesses.”