3Q beats but trimming numbers on updated price outlook UPM''s Q3 comparable EBIT fell 72% year-on-year but came in 16% ahead of consensus driven by beats in the Communication and Specialty Paper segments more than offsetting a shortfall in Fibres (pulp). Paso de los Toros and OL3 are now running close to nominal capacity and the Leuna biorefinery is on track with its (admittedly previously revised) build. Anticipating soft volume trends persist and moderating our price assumption outlook in Fibres and Energy though, we trim our above-consensus forecasts and target price accordingly. However, offering a 7% 2024 FCF yield, rising to 9% in 2025 we continue to see upside and reiterate our Outperform rating. New volume helps offset weak prices... Fibres (pulp) volumes rose 35% qoq with the new BEK pulp mill (PdlT) achieving 70% of nominal production capacity whilst Energy deliveries rose 27% yoy with the second full quarter''s benefit from nuclear power station OL3. These helped offset the sharp decline in pulp prices whilst pulp production costs fell 24% per tonne qoq as the new low-cost pulp mill increased its share of the mix and some underlying costs started to ease. ...but Paper segments were the surprise point of strength Despite continued weak volumes Communication Paper and Specialty profits rose qoq as production costs fell as a result of lower input costs. Given the lagged effect from pulp we expect continued benefit into Q4 and early 2024. Trimming DCF-derived target price to EUR36 (from EUR37) - reiterate Outperform FY23 capex guidance has increased slightly but management reassuringly reiterated a sharp fall for FY24+. No decision has been made on the Rotterdam biofuels project but retiring CEO Jussi Pesonen reiterated his view that the opportunity looks promising. For those meeting management soon, see inside for suggested questions.