UPM-Kymmene reported strong results, largely driven by pulp – also the group’s biggest growth focus area. Apt support was provided by the high-margin non-paper divisions. While there were some issues in paper, management is well-positioned to leverage its past experience and market dominance to address the respective challenges gradually. Overall, UPM remains an attractive bet to play paper & packaging market’s long-term fundamentals.
Companies: UPM-Kymmene Oyj
UPM has embarked upon 2021 on a promising note. While legacy paper remains a concern, the firm remains well-equipped to continue restructuring efforts. Moreover, with strong fundamentals across all other divisions and various growth investments underway, UPM remains on track to transform its old school positioning as a European paper major. Although such measures require sizeable investments, its strong balance sheet allays any financing concerns and, at the same time, renders an apt cushion wit
UPM ended 2020 on a good note, with the Q4 performance witnessing meaningful (sequential) recovery and management deciding to maintain the dividend – despite ambitious growth plans being implemented. With various green shoots across (key) divisions and growth investments progressing well, we believe UPM remains an attractive sector bet.
While the next few quarters could be tricky – due to re-emerging COVID-19 risks, market-aligned long-term vision plus a credible track record renders support to
Unlike the peers, UPM’s Q3 results came in short of expectations. While operating margins did improve in sequential terms, with Communication Papers regaining profitability, the other divisions were a mixed bag. Overall, the group is yet to re-attain healthy performance levels.
However, taking on board the diversity gains via non-paper growth investments, planned cost-saving measures, potential for (material) gains via revaluation of forests and balance sheet comfort, UPM remains our preferred
Compared with the sector, COVID-19 has taken a bigger toll on UPM-Kymmene, largely due to its material conventional paper exposure. However, given management’s impeccable past record in both restructuring (inefficient) capacities and slashing costs, generation of meaningful stakeholder returns, and pursual of growth investments (outside paper), we believe that another revival of fortunes is possible. Remember, the group’s balance sheet flexibility and sizeable redundant paper capacities render a
After a weak Q1, UPM’s performance severity aggravated in Q2. The situation was complicated by extreme COVID-19-induced pressure in conventional paper – also the group’s biggest division (c.33% of sales). However, taking into consideration management’s prowess to (effectively) deal with paper market challenges, and the potential of on-going transformational projects and pandemic-triggered gains for various divisions, our recommendation should be maintained.
UPM also embarked upon 2020 on a weak note. There was a pertinent (profitability + cash flow) weakness at the group level. Fortunately, the divisions with packaging credentials did well, while the net cash position was maintained. Although the performance is likely to erode further in the coming quarters, UPM by virtue of its balance sheet resilience and other underlying strengths should do reasonably well.
Despite material pulp market headwinds, especially in Q4 19, UPM reported stable full-year results. The turnaround in paper and energy, along with sustained cost optimisation, rendered meaningful support. Moreover, UPM now has two sizeable high-growth projects – in pulp and biochemicals – underway, and its strong balance sheet position should render a valuable cushion. Although the brewing (Coronavirus-induced) macro uncertainties is a (near-term) cause for concern.
Even though market conditions have become tougher, UPM managed to limit its Q3 business impact via effective cost savings. Interestingly, management has guided to maintain its 2019 performance at a good level. Continuation of paper rationalisation and the pursual of high-potential growth opportunities adds to the group’s overall investment attractiveness.
Q2 results came as no surprise as profit normalisation – after excessive gains in 2018 – is slowly materialising. Even though pulp markets/prices are expected to soften further in the coming years due to evolving demand-supply dynamics, pulp’s long-term prospects remain sacrosanct – reflecting UPM’s decision to invest $2.7bn in a new pulp mill in Uruguay. Through a combination of sustained restructuring measures and non-paper growth investments, UPM is gradually expected to reduce its legacy pap
2019 began on a strong note for UPM-Kymmene. Healthy performances were sustained across all divisions, with the exception of Speciality Paper – where the scope for meaningful recovery still remains. While management guides for the secular decline of conventional paper to be sustained, it remains focused on niche, though high-potential, growth opportunities. These efforts should be backed by UPM’s undisputed balance sheet strength. Moreover, cost optimisation measures, in which the group has an i
The year 2018 ended on strong note, with healthy operating earnings across divisions – excluding Specialty Papers – being further complemented by material forest revaluation gains. As a consequence, profits soared to record-highs – despite growing cost pressure, and the balance sheet resilience was maintained. Now, the next leg of growth should come from (transformational) investment plans – with a net cash position lending a more-than-needed financing cushion.
While UPM’s Q3 results were healthy, they were somewhat capped by temporary disruptions. Price movements were positive across divisions, with pulp and energy being big beneficiaries. However, as some of pulp’s recent gains seem to be driven by transient events, some medium-term pricing normalisation seems inevitable. Nevertheless, improvements/stability in the smaller divisions should continue. With fundamentals remaining strong, the recent sell-off offers an attractive entry point.
The Q2 results were in line with the Street’s expectations on the back of better prices across divisions, despite lower volumes, higher costs and the material maintenance shutdown impact. While pulp and paper’s market tailwinds should continue in the near term, even other divisions should perform well – given the supportive market environment. Despite the brewing inflationary pressure and eventually normalising margins, the group should manage to maintain its robust cash flows and, hence, its st
The Q1 18 results were supported by pricing improvements across divisions. However, the gains were partly capped by higher costs and lower deliveries. While the benefit of healthy pulp prices could continue in 2018, some normalisation should get underway 2019 onwards. Moreover, a tricky cost environment and the continuation of a volume weakness in Communication Papers are an added burden. While UPM has a strong balance sheet, this advantage (so far) hasn’t been leveraged optimally.
Research Tree provides access to ongoing research coverage, media content and regulatory news on UPM-Kymmene Oyj.
We currently have 0 research reports from 0
Companies: Sylvania Platinum Ltd.
Phoenix copper today provides an update on its ground geophysical survey over the Red Star prospect near its Empire copper project in Idaho. The Red Star skarn mineralisation (lead and silver ± copper, zinc) is associated with magnetite; the survey just undertaken was to better understand the distribution and orientation of magnetite to find potential mineralisation and to inform the location and direction of a further drilling programme.
Companies: Phoenix Copper Ltd. (United Kingdom)
We see the UK Government’s Net Zero Strategy as being overall helpful but not especially definitive. Amongst our coverage group, Drax Group (DRX LN) and Velocys (VLS LN) benefit from the Humberside CCS cluster prioritisation and Velocys from SAF support. The amount of renewables is likely to boost the need for flexibility solutions where Drax, Gore Street (GSF LN) and SIMEC Atlantis (SAE LN) can benefit. Hydrogen companies ITM (ITM LN) and Powerhouse Energy (PHE LN) are likely to find support. T
Companies: ADN DRX GSF ITM NESF PHE SAE SIT STRLNG TLG VLS
Companies: Shanta Gold Limited
Today’s IPO of Tungsten West (TUN-LON) unlocks a valuable, long term revenue stream for Hargreaves. This comprises a £1m per annum fee (first payment next month) as well as a mining services contract once the mine recommences production. The resulting EPS upgrades are 6% and 7% in FY22 and FY23 respectively, followed by 9% in FY24 with the first partial contribution from the mining services contract. This continues Hargreaves’ impressive recent run of forecast upgrades and reinforces our convict
Companies: Hargreaves Services plc
We are initiating coverage of VAST Resources (VAST), which has wholly-owned Baita Plai and Manaila polymetallic mines plus an interest in two exploration projects, all located in Romania. At this stage, Baita Plai is the main driver for our valuation as it is currently being ramped up to 14kt per month. As such, we expect Baita Plai’s Cu eq output to reach c 2.4ktpa in FY23F followed by 3.3ktpa in FY24F. This, coupled with Manaila’s potential re-start of an additional 3ktpa of Cu eq over the sho
Companies: Vast Resources plc
No Joiners Today.
No Leavers Today.
What’s cooking in the IPO kitchen?
Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz. Offer TBA. Due early Nov.
Life Science REIT to join AIM raising up to £100m. This will be the first London listed real estate investment trust (REIT) focused on UK life science properties providing investors with exposure
Companies: SYS1 ARE SO4 SNG TMG TMT OHG IDE KIBO MRL
Shanta Gold (AIM: SHG) has, this morning, announced its production and operational results for the quarter ended 30th September 2021 – see Fig 1. Operationally this was a slightly weaker than expected quarter but very promising from the corporate side with a new five-year plan announced, an 0.10cps interim dividend announced and a resource update at the West Kenya Project (WKP).
QoQ production was flat at 14,194 oz and AISC rose to $1,480/oz caused by a temporary drop in grade as well as hig
Oil posted the longest stretch of weekly advances since 2015 as OPEC+ producers only modestly supply the market and as US crude supplies shrink.
Crude futures rose 1.5% Friday in New York, up for a ninth straight week. President Joe Biden said Thursday night that Americans should expect high gasoline prices to continue into next year because of supply being withheld by OPEC and other foreign oil producers. Stockpiles at the biggest US storage hub are draining to levels last seen when crude pr
Companies: FO 88E DEC EME GTC TRIN UOG WEN
Trifast has released a good interim trading update ahead of its interim results due on 23 November. Overall trading has been in line with management expectations at “both revenue and profit levels” since the AGM update in July although this belies the strength of the Group's top line performance in our view. We remain buyers.
Companies: Trifast plc
Rio’s investors day was focused on two of the most critical mining industry thematics in today’s times, i.e. green and growth. The announced measures couldn’t have materialised at a better time, given the (recent) woes pertaining to governance and the iron ore market sell-off. Remember, considering Rio’s enviable balance sheet strength, it has the flexibility to pursue the targeted plans with rigorously and, at the same time, maintain ‘relative’ shareholder reward attractiveness. Hence, we reite
Companies: Rio Tinto plc
Tungsten West (TUN.L) has joined AIM. Tungsten West is the 100% owner and operator of the historical Hemerdon tungsten and tin mine located near Plymouth in southern Devon. Hemerdon represents the world's third largest tungsten mineral resource, with a JORC (2012) compliant Mineral Resource Estimate of approximately 325Mt at 0.12 WO3. Capital raised on Admission: £39m. Anticipated Mkt Cap: £106.2m.
Future Metals NL (ASX:FME, FME.L) (formerly named Red Emperor Resources NL) had joined AIM
Companies: SOLI RBD ALU ATQT BBI CWR DRV ORCP WATR
i3 Energy indicated that Q3 2021 production amounted to 13,740 boe/d (WHIe: 13,742 boe/d) and that production in September amounted to 18,985 boe/d (WHIe: 18,834 boe/d). The company indicated that it now forecasts net operating income (“NOI” = revenue minus royalties, opex, transportation and processing) to be $US 65.7m for 2021 and $US 119.1m for the next twelve months starting 1 October 2021 – in line with our assessment that i3 Energy is on the cusp of generating more than $US 100m of cash fl
Companies: i3 Energy Plc
No joiners today.
No leavers today.
What’s cooking in the IPO kitchen?
ATOM headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM towards the end of the year. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas company which has incubated and financially supported ATOME to date, by way of a dividend in specie and flotation.
Devolver Digital to join AIM, an award-winning digital video games pu
Companies: SAE HMI MNO MSMN NSCI OMG PCA
Botswana Diamonds (BOD LN) – £550,000 fund-raising
Castillo Copper (CCZ LN) – IP Survey identifies potential drill targets at Luanshya
KEFI Gold and Copper* (KEFI LN) – Security incident resolved
Kore Potash (KP2 LN) – Quarterly operations update
Petropavlovsk (POG LN) – Q3 update highlights recovering production at own mines with increasing POX Hub utilisation
Sibanye-Stillwater (SSW JSE) – In talks to buy Brazilian projects for $1bn
Strategic Minerals* (SML LN) – £400,000 fund-raising
Companies: BOD KEFI KP2 POG SML CCZ SSW