HELSINKI (News release) -- UPM lowers its outlook for 2023. Comparable EBIT in H1 2023 is now expected to decrease from H1 2022. Full-year 2023 comparable EBIT is expected to decrease from 2022.

Earlier, UPM expected comparable EBIT to increase in H1 2023 from H1 2022, and 2023 to be another year of strong financial performance.

Destocking in the various product value chains has continued to hold back delivery volumes in most UPM's businesses, resulting in slower recovery of volumes than earlier expected. In addition, chemical pulp prices have fallen faster than expected, towards estimated bottom-of-the-cycle price levels. Finally, as indicated earlier, UPM has high maintenance activity during Q2 2023.

In 2023, UPM's delivery volumes are expected to benefit from the ramp-up of the UPM Paso de los Toros pulp mill and the OL3 nuclear power plant unit, as well as the phasing out of the destocking in the product value chains as the year progresses.

UPM continues to focus on margin management during the short-term lack of volumes. Many variable cost items have started to decrease, as expected, although the cost benefit of lower pulp prices to UPM's two paper businesses comes with the normal delay.

For reference, UPM's previous outlook for 2023:

"UPM reached record earnings in 2022, and 2023 is expected to be another year of strong financial performance. UPM's comparable EBIT is expected to increase in H1 2023 from H1 2022.

In 2023, UPM's delivery volumes are expected to benefit from the ramp up of the UPM Paso de los Toros pulp mill and the OL3 nuclear power plant unit. In H1 2023, however, demand for many UPM products is expected to be held back by destocking in various product value chains. The opening of the Chinese economy from the COVID lockdowns and easing inflation in other key economies represent potential for increasing demand as the year progresses.

Year 2023 is starting with high-cost level for many inputs, while the lower demand is exerting pressure on product prices. However, several input costs have also progressed past their peak. UPM will continue to manage margins with product pricing, by optimising its product and market mix and by taking measures to improve variable and fixed cost efficiency.

There are significant uncertainties, both positive and negative, in the outlook for 2023, related to the European, Chinese and global economy, Russia's war in Ukraine, the remaining effects of the pandemic, energy prices and related regulation in Europe, and the ramp-up of the OL3 power plant unit."