Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on UPM-KYMMENE OYJ. We currently have 6 research reports from 1 professional analysts.
|05Dec16 04:15||GNW||Norges Bank's holding in UPM has gone below the threshold of 5 per cent|
|03Nov16 09:30||GNW||UPM Paper ENA plans to reduce 305,000 tonnes of graphic paper capacity in Europe|
|25Oct16 07:31||GNW||Interim report Q3/2016: Performance improvement continued into second half of 2016 - excellent, seasonally strong Q3|
|18Oct16 08:01||GNW||Invitation to UPM's press conference and webcast on Interim Results for the third quarter of 2016|
|11Oct16 11:00||GNW||UPM Raflatac expands its asset platform in Wroclaw, Poland to meet the label stock demand growth in Europe|
|30Sep16 07:00||GNW||UPM Paper Asia to be renamed UPM Specialty Papers|
|01Sep16 03:00||GNW||Capital Markets Day: UPM's business model promotes strong performance and profitable growth|
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Research reports on
Paper’s strong rebound adds to the earnings zing
01 Nov 16
Yet again UPM-Kymmene has posted operating results materially ahead of the consensus and AV’s expectations. Q3 16 sales came in at €2.4bn (-3.4% yoy; flat qoq). Despite 7.2% higher Asian paper volumes (driven by the ramp-up at Changshu), the continued weak pulp and energy prices (both down 14%) and a challenging European paper environment (prices and volumes down 2% and 2.9%, respectively) weighed on the top-line. However, a sequential rebound in energy (+6.9%) and European paper (+6.6%) volumes, and pricing improvement/stability (across most divisions) cushioned this somewhat. Profitability improvements continued unabated with an adjusted EBIT of €305m (+41% yoy; +22% qoq) translating into a record operating margin of 12.5%. Paper ENA again surprised (adjusted EBIT came in at €112m vs. €8m in Q3 15 and €45m in Q2 16) on the back continuous cost savings, favourable comps (as Q3 15 had been marred by unfavourable currency hedges) and seasonal benefits. Growth investments in Paper Asia and Raflatac (labels) – benefiting from growing volumes and/or an improving product mix – too witnessed a healthy profitability progression. Even though profitability in Biorefining (-23% yoy; -5.3% qoq) and Energy (-33% yoy; +36% qoq) suffered again due to weak prices, sequentially there was some relief. Operating improvements percolated down, with net income coming in at €268m vs. €408m in Q3 15 (which included €289m of forest revaluation gains) and €198m in Q2 16. Strong reported OCFs of €506m (+39% yoy; +17% qoq) and conservative capex (given that most growth investments are already through) resulted in net debt being further reduced (down 20% vs. end Q2) to €1.8bn. Management guides Q4 16 performance to be negatively impacted by seasonality, and maintenance activity in Biorefining (pulp) and Paper ENA.
Yet another strong performance compels a material earnings upgrade
27 Jul 16
UPM-Kymmene’s Q2 results (barring the top-line) were ahead of consensus and AV expectations. While Paper ENA continued to suffer from the ire of weak prices (-2%) and volumes (-5.2%), lower pulp prices (-12%) and sombre energy market dynamics (prices and volumes down 13% and 5%, respectively) exacerbated the sales pressure (€2.4bn; -4% yoy). Although sequentially sales were flat due to volume support from Raflatac (labels), Paper Asia and Plywood. Despite the top-line vagaries, UPM’s profitability delivery remained strong. Adjusted EBIT came in at €251m (+34% yoy; -5.3% qoq). All divisions, with the exception of Biorefining (pulp) and Energy, witnessed meaningful improvements. These improvements were a combination of initiation of/pick-up in earnings contribution from the growth projects and strong delivery on (fixed and variable) cost savings. However, bottom-line gains mellowed (net profit of €198m; +24% yoy; -13% qoq) due to: 1/ lower gains from revaluation of biological assets; and 2/ higher income taxes. Cash flows remained healthy, both yoy and qoq. Reported OCFs came in at €434m (+34% yoy; +27% qoq). Even after the full-year dividends payments in Q2, UPM’s debt remained largely unchanged at €2.3bn. Management guides for profitability improvements to continue in H2 16 on the back of the incremental contribution of growth investments and the continuation of cost rationalisation.
Paper joins the party with pulp and labels
28 Apr 16
UPM-Kymmene’s start to 2016 could not have been better with the profitability coming in materially ahead of the Street’s expectations. Although sales were a bit disappointing having declined 1.6% yoy (and 5% qoq) to €2.4bn as European paper volumes (down 2% yoy and 8.7% qoq) continued to sag, with sequential weakness being aggravated by lower pulp and energy prices, and seasonally lower label volumes. However, a material turnaround in the paper ENA and continuation of the good performance in pulp and labels (better margins) helped adjusted EBIT surge by 37% (and 15% qoq) to €265m – a record high. Paper ENA’s EBIT came in at €46m vs. €5m and €18m in Q1 15 and Q4 15, respectively, due to a combination of (fixed and variable) cost savings and the absence of unfavourable currency hedges (unlike the previous periods). Overall, a combination of cost efficiencies (across businesses) and the contributions from growth projects helped profitability gain momentum, after a subtle 2015. Net profit galloped 46% (and 18% qoq) to €227m (despite €29m of charges related to the closure of the Madison Paper Industries JV) and reported OCFs came in at €341m vs. €108m in Q1 15. Although OCF comps were skewed by a one-off working capital use of €147m in Q1 15 vs use of only €14m in Q1 16. UPM’s use of leverage continued to reduce, with net debt reaching another record low of €2.2bn (-8.9% qoq). On the day of the Q1 results release, the group also announced sale of its Schwedt newsprint mill (c.3% of capacities) in Germany to LEIPA group for a consideration of €70m – which is line with our NAV estimates.
Operating improvements continued despite languishing paper
04 Feb 16
UPM-Kymmene ended 2015 on a high with its Q4 and 2015 results exceeding AV and consensus estimates. These results fructified in spite of paper (a key outperformer in 2014) failing to deliver in 2015. *Some top-line growth* Sales: Q4 – €2.6bn (+1.7% yoy; +1.7% qoq); 2015: €10.1bn (+2.7%; +1.5% ahead of AV estimates) Q4 sales were supported by solid growth in Biorefining (pulp; +21%) and Raflatac (labeling; +10%) where a materially weaker Euro (down 14% vs. USD) was the key driver, despite persistent weakness in paper volumes and prices, energy prices and plywood volumes. With feeble European paper being a top-line drag since 2013, UPM finally achieved top-line growth with trends similar to Q4 resonating throughout 2015. *Highest annual EBIT since 2006* Adjusted EBIT: Q4 – €209m (+5.6%; -3.2% qoq); 2015: €808m (+5.5%; +1.6% ahead of AV estimates) Cost optimisation has become an area of unwavered focus for UPM over the years, with the group achieving €41m and €150m of savings during Q4 and 2015, respectively, under the profit improvement programme. Although some of the gains were lost (€24m and €114m in Q4 and 2015) due to unfavourable currency hedges and higher Euro-denominated pulp prices (thereby increasing raw material costs), which primarily impacted the paper businesses. Even sequentially, barring some unexplained intersegment losses, performance across divisions remained robust – especially for the energy segment (+29%), which benefited from lower energy purchase costs. Attributable net profit: Q4 – €193m vs. €8m and €408m in Q4 14 and Q3 15, respectively; 2015: €916m (+79%; +6.8% ahead of AV estimates) Unlike Q4 14 – which was marred by €135m of paper asset impairments – Q4 15 was blemish-free. This was also in stark contrast with Stora Enso which has already announced €262m of impairments for Q4 15. In addition to the operating improvements and no hefty impairments, a one-time gain on forest assets (€265m in Q3 15) culminated into a staggering full-year net profit growth. Although further down in the statement of comprehensive income, €307m and €405m of losses were recognized in Q4 and 2015, respectively, on available-for-sale investments (primarily comprising the ill-fated TVO nuclear assets). *Balance sheet supported growth investments and dividends* Even though OCFs weakened a bit (-5.7%) to €1.2bn as last year’s working capital benefits reversed, a resilient balance sheet (net debt down 12% to record low levels of €2.4bn) helped UPM pursue its growth investments – with 2015 capex up 14% to €432m. Also, full-year dividend was increased by 7.1% to €0.75/share (+3.6% ahead of AV estimate). With most growth investments in place, management guides €350m capex for 2016.
Gains from forest revaluation add to the EBIT improvements
29 Oct 15
In continuation with its Q2 performance, UPM-Kymmene maintained its business momentum in Q3 15. Sales were up 4.8% yoy (-0.7% qoq) to €2.5bn, driven by material benefits from a depreciating euro (down 19% vs. the USD) impacting the Biorefining (pulp) segment, followed by strong Raflatac (labelling), Plywood (+6.5%) and Energy (+9.6%) volumes. The top-line grew despite lower pulp volumes (-9.1%; due to scheduled maintenance shutdowns), and still weak paper and energy prices. Adjusted EBIT came in flat yoy at €217m as the group managed to reduce its variable costs by €52m (underpinned by a €150m cost savings programme – 73% achieved so far) and realised €19m of net forex benefits (as most gains were moderated by €29m losses on currency hedges in the paper businesses). Although, sequentially some fixed cost rationalisation (after paper capacity curtailments in H1 15) facilitated an 11% improvement in operating profits. Similar to Stora Enso, UPM too recognised (one-off) gains amounting to €289m on the revaluation of its forest assets. Consequently, net profit jumped 1.2x to €408m (+1.6x qoq). Reported OCFs continued to improve (+21% yoy; +12% qoq) to €363m as working capital improvements were sustained – release of €48m vs. use of €36m in Q3 14 and release of €31m in Q2 15). Management reiterated its 2015 profitability outlook being similar to the performance achieved in 2014. Although its optimism over an anticipated H2 recovery in the paper business will not materialise, adequate support should surface from the pulp business.
Pulp and labels compensate for weakening paper
31 Jul 15
After a subtle start to 2015, UPM-Kymmene reported a good Q2 performance – broadly ahead of consensus estimates. Sales came in at €2.5bn (+4.4% yoy; +2.5% qoq) driven by higher euro-denominated prices in Biorefining (pulp) and Raflatac (labels), and solid label volumes. These benefits more than offset declining European paper demand (2.5% lower deliveries) and prices, and lower energy prices (-17%; due to a mild winter and improved hydrology in the Nordic region). Even though weakness in paper is continuing to date, strong development of other segments has helped UPM post its first quarterly top-line growth since Q2 12. Despite a slowing pace in cost savings (€27m vs. €47m and €46m in Q2 14 and Q1 15, respectively), adjusted EBIT inched higher (+17%; +3.7% qoq) to €195m. An average 24% depreciation of the euro vs. the US dollar in Q2 culminated in €60m of forex benefits, though €36m of hedging losses in the paper business dampened the gains. The bottom-line turnaround continued with a net profit of €160m (+24%; +3.2% qoq). Improving profitability and the reversion to normal working capital requirements (release of €31m vs. use of €36m and €147m in Q1 15 and Q2 14, respectively) translated into strong reported OCFs at €324m (+51%; +2x qoq). After a dismal H1 for European paper (Paper ENA) so far, management guides for some improvements in H2 earnings.
30 Nov 16
Abzena (ABZA): Interim results indicate happy customers (BUY) | Horizonte Minerals* (HZM): Fund raise completed (CORP) | SacOil* (SAC): Half-year trading statement (CORP) | Revolution Bars (RBG): New openings (BUY) | Amino Technologies* (AMO): Multi operator FUSION roll out (CORP)
Small Cap Breakfast
29 Nov 16
Asia Pacific Investment Partner - the research-driven emerging and frontier markets real estate development business intends to float on AIM and conduct a placing in December RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
GTL transaction not going ahead
01 Dec 16
Intelligent Energy (IEH) has announced that the deal to acquire the Energy Management Business of GTL will not now be consummated. The move leaves management free to concentrate on driving sales of commercially ready B2B products, which is a key element of its strategy. We adjust our FY17e revenue estimate while leaving our pre-exceptional losses and cash-flow forecasts unchanged.
01 Nov 16
Since our last outlook note, Quadrise has begun to supply MSAR for extended LONO sea trials, paving the way for commercial adoption from calendar H217 onwards. In August it signed a memorandum of understanding with clients in the Kingdom of Saudi Arabia (KSA), which is a key enabler for progressing the production-to-combustion pilot there. In October it completed a placing and open offer raising a total of £5.25m (gross). This should enable it to transition comfortably to the commercial phase on successful completion of the LONO and KSA trials.
24 Nov 16
Quixant* (QXT): Gaming gains (CORP) | SCISYS* (SSY): Bringing good news from Germany (CORP) | Hayward Tyler Group*: Contract wins (CORP) | Sound Energy (SOU): TE-7 flow rate and fund raise (BUY) | Water Intelligence* (WATR): Growth and improving returns in a defensive market (CORP) | Imaginatik* (IMTK): Interim trading update (CORP)