2Q op EBIT misses cons. by 32% on Communication Paper; 2H guidance soft UPM''s Q2 comp. EBIT fell 31% yoy with more than half the shortfall versus consensus from Communication Paper, hit by demand weakness, including in transatlantic trade, as well as decline of the dollar. The latter also added to pressures from the fall in the pulp price on the Fibres segment. Looking into H2 guidance has been struck which we interpret as assuming demand and pricing remains weak - a sensible base scenario for now. We lower op EBIT 7-9% and DCF-based target to EUR27. Offering 6% dividend yield, still covered by cashflow, we retain our Outperform rating. Dollar, demand and pulp headwinds build... Weakness of the US dollar has weighed on revenues in both Fibres (dollar-priced pulp) and Communication Paper with the latter impacted by both US operations and transatlantic shipments. Tariff uncertainty has also hit demand here as well as in Chinese fine paper operations though the rest of Specialty Papers and Adhesive Materials have been more resilient. ...though there are finally more encouraging signs in bio-fuels and -chemicals From EUR58m losses in 2024, biofuels operations returned to breakeven in Q2 and we think can make further modest progress in recovery. Meanwhile the new biochemical plant has started operating its first of three modules with management reiterating expectations of reaching an EBIT profit in 2027 (from EUR73m pre-startup losses in 2024 and EUR41m losses in 1H25). Lowering forecasts and DCF-based target to EUR27/ share Our revised 2H op EBIT of EUR516m sits slightly below the mid-point of EUR425-650m guidance. Some technical guidance (e.g. maintenance costs; assuming spot FX holds) has been given for this but not pricing assumptions. For hardwood pulp we assume an unchanged $513/T for the period (vs. $501/T spot in China as of last Friday). For those meeting management soon, please see inside for suggested questions.