Helsinki (News release) -- UPM-Kymmene Corporation posted a 32% increase in comparable EBIT for Q3 2024, reaching Euro 291 million, despite a 2% drop in sales to Euro 2,521 million from Euro 2,584 million in the same quarter last year. The surge in profitability comes against the backdrop of a challenging market environment marked by slower-than-expected demand recovery across UPM's product lines. While the company managed to improve its earnings, its operating cash flow fell sharply to Euro 242 million from Euro 641 million, reflecting weakened market conditions, particularly in the pulp and specialty papers segments.

UPM's comparable EBIT rose to 11.5% of sales, up from 8.5% a year earlier. Despite the gains, the company faced increased financial pressure, with net debt climbing to Euro 2,804 million, or 1.59 times EBITDA, compared to 1.27 times last year. UPM's liquidity remained robust, however, with Euro 3.7 billion in cash funds and unused credit facilities by the end of the quarter. Year-to-date figures reveal a 17% rise in comparable EBIT to Euro 806 million, while sales for the first three quarters dropped 3% to Euro 7,707 million.

The quarterly performance underscores varied outcomes across UPM's key segments. Renewable fibres saw a boost from full production at the Paso de los Toros pulp mill in Uruguay, although falling hardwood pulp prices, particularly in China, weighed on overall results. High wood costs in Finland led to restricted pulp production, prompting UPM to begin efficiency negotiations across its pulp, forest, and timber divisions. The advanced materials segment faced setbacks as demand for UPM Raflatac and specialty papers slowed after a strong start to the year. Specialty papers were further impacted by high fibre costs and soft demand in China's fine paper market, while UPM Plywood managed stable performance despite sluggish construction markets.

In the decarbonisation segment, UPM Energy's earnings were hit by low electricity prices driven by abundant renewable generation. However, UPM Biofuels benefitted from lower feedstock costs, and recent regulatory support suggests a gradual recovery ahead. The UPM Biochemicals project in Germany remained on track, with production expected to commence soon. Meanwhile, UPM Communication Papers posted quarter-on-quarter improvements in both volumes and profitability, despite a structural decline in print media demand. UPM closed its Hürth newsprint mill in Germany and plans to shut down a fine paper machine at Nordland Papier by year-end to sustain performance in this mature market.

CEO Massimo Reynaudo described the results as a mix of progress and challenges. He highlighted the full production ramp-up at Paso de los Toros as a significant contributor to earnings, even as demand slowed after a promising start to the year. Reynaudo emphasized UPM's continued focus on cost optimization and competitiveness, crucial for navigating current market uncertainties. He projected that Q4 2024 comparable EBIT will match or exceed the Euro 323 million reported in Q4 2023, with similar expectations for full-year earnings.