Finnish paper maker UPM reports profit in 4th quarter buoyed by lower costs

By Matti Huuhtanen, AP
Tuesday, February 2, 2010

Finnish paper maker UPM makes Q4 profit

HELSINKI — UPM-Kymmene Corp., the world’s largest magazine paper maker, on Tuesday reported a fourth-quarter net profit of €295 million ($410 million) on falling costs and said it expects a slight improvement in the industry.

The profit was up from a net loss of €286 million a year earlier. Revenue fell 9 percent in the October-December period, to €2.1 billion from €2.3 billion, but lower costs helped improve performance, UPM said.

The company’s share price closed down 1.5 percent at €8.02 ($11.18) on the Helsinki Stock Exchange.

CEO Jussi Pesonen gave a cautiously upbeat outlook.

“The current year will pose challenges, but we see signs of improvement too. However, in our main markets recovery is expected to be slow and differ from country to country,” Pesonen said. “In 2010 we expect the pulp business to improve … and also paper deliveries are expected to be higher than last year.”

The recession has severely hit the forest products industry, and UPM has axed thousands of jobs and warned of further layoffs as it cuts production and closed mills.

UPM said profitability in the period was mainly improved by lower costs, including €80 million in wood costs and €25 million in energy costs, compared to 2008. Cutbacks also dropped fixed costs by €60 million, it said.

In 2009, UPM swung to a full-year net profit of €170 million from a net loss of €180 million in 2008 but net sales crashed almost 20 percent to €7.7 billion.

Pesonen cautioned that not all problems are over.

“Operating profit for this year is not expected to change materially from last year. The first quarter is expected to be seasonally the weakest quarter,” he said.

Helsinki-based UPM-Kymmene, one of Europe’s largest forest products companies, has 64 plants in 15 countries with 170 sales and distribution companies worldwide. It employs 23,200 — down from some 26,500 a year earlier.


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