Strong First Quarter Performance For Paper Company

An UPM-Kymmene Corporation product story

Edited by the Printingtalk editorial team May 7, 2007

UPM has reported that its operating profit for the first quarter of 2007 was EUR221 million.

Jussi Pesonen, president and chief executive officer at UPM, commented: "UPM's year has started off well.

Enhanced efficiency was visible in our result and our operating profit grew clearly during the first quarter.

The fixed costs decreased as planned." He added: "Demand for paper continued to grow.

The prices of newsprint, uncoated fine paper and some speciality papers increased.

However, the price development in magazine papers has been clearly disappointing.

The average price for paper deliveries remained at the same level as last year, although our deliveries in Europe increased in-line with the market growth." Pesonen explained: "The business environment is challenging.

Increase in the raw material costs, wood and recycled fibre in particular, is weakening the profitability.

In Finland, the price of wood is now at a record high.

However, we managed to maintain a moderate cost inflation at one per cent - two per cent." He commented that there was strong growth of demand in sawn goods.

Due to the realised structural changes UPM was able to capitalise well on the market development, even though the availability of wood logs was a challenge.

Self-adhesive label markets continued to develop favourably and prices remained steady.

He continued: "For the second quarter, demand for printing papers is forecast to grow in Europe from the corresponding quarter of last year, whilst in North America demand is expected to decrease.

Strong growth in demand is expected to continue in the emerging markets and in the second quarter, we estimate our paper deliveries to increase from last year and average price for all paper deliveries to be about the same as in the first quarter of 2007." Describing the situation in the self-adhesive label market, he added: "Demand for self-adhesive label materials is forecast to continue to grow in all markets and prices are expected to remain stable." The company added that its overall cost inflation is estimated to remain at the level of one per cent - two per cent, including expected cost savings from its continuing profitability programme.