Late yesterday, UPM issued positive profit warning disclosing EUR279m 1Q21e comparable EBIT, 25% ahead of consensus, due to better than expected pulp, labels and graphic paper profit. Modelling 30% CY21 pulp price recovery, our upgraded UPM FY21e estimates of EUR1,118m comparable EBIT and EUR1.59 EPS sit 8% above street. See positive UPM read to pulp peers Stora Enso and SCA. Reaffirm UPM Outperform ahead of its 1Q21e results on April 27.
Positive profit warning, disclosing EUR279m 1Q21e EBIT, ahead of formal April 27 1Q21e
Ahead of formal 1Q21e results on April 27, UPM issued positive trading update yesterday, stating it will deliver EUR279m 1Q21e comparable EBIT, 25% ahead of EUR223m Infront Data 1Q21e consensus, due to better than expected pulp, labels and graphic paper divisional profitability.
Modelling 30% CY21 pulp price recovery: our FY21e EBIT estimates sit 8% ahead of street
UPM is ''net long'' 1mT pulp: each 10% pulp price = EUR56m annualised EBIT. Modelling 30% CY 2021 pulp recovery, our upgraded EUR1,118m FY21e Comparable EBIT sits 8% ahead of street.
Spearheads on track to double UPM EBIT from EUR0.95bn in FY20 to EUR1.9bn in FY24
Expect April 27 update on UPM ''Spearheads for Growth'' (Pulp in Uruguay and Bio-chemicals in Germany) which we believe remain on-time and on-budget. Due to pulp recovery and Spearhead for Growth delivery, expect UPM EBIT will double to EUR1.9bn in 2024 (19% FY20-24 EPS CAGR).
Reaffirm Outperform with EUR36 TP ahead of UPM 1Q21e results on April 27
As confidence builds in: 1) Global pulp recovery, 2) UPM ''Spearheads for Growth'' delivery, with 3) Continued appealing dividends, we expect UPM re-rating. Outperform ahead of April 27 1Q21e.
Positive UPM read to Stora Enso and SCA
With confidence in 30% 2021 European and US pulp recovery, at pulp makers Stora Enso, UPM and SCA; our FY21e EBIT estimates sit 4-8% ahead of consensus. For more, see our April 12 note: Unwrapping Q2 pulp and packaging...
