Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- UPM-Kymmene Oyj (UPMKF, Financial) reported a 21% increase in comparable EBIT for the full year 2024, driven by strong contributions from the Paso de los Toros pulp mill and improved advanced material deliveries.
- The company achieved a 4% year-on-year sales growth in Q4 2024, with a 29% increase in comparable EBIT compared to the same period in 2023.
- UPM-Kymmene Oyj (UPMKF) implemented significant cost-saving measures, reducing fixed costs by EUR103 million compared to the previous year.
- The company maintained a strong financial position with a net debt-to-EBITDA ratio of 1.66 times and cash funds and committed credit facilities totaling EUR3.2 billion.
- UPM-Kymmene Oyj (UPMKF) announced a share buyback program, with a maximum of 6 million shares to be repurchased, complementing an unchanged dividend of EUR1.50 per share for 2024.
Negative Points
- The recovery in demand slowed down in the second half of 2024, impacting overall performance.
- Average pulp selling prices decreased by 11% in Q4 2024, negatively affecting EBIT.
- The company made an impairment of EUR113 million on goodwill in Finnish operations due to increased wood costs.
- UPM-Kymmene Oyj (UPMKF) faced a significant impairment of EUR373 million in the Leuna biorefinery assets due to cost overruns and construction delays.
- The biofuels and biochemicals segments had a significant negative impact on the 2025 bottom line, with biofuels affected by a downturn in advanced fuels markets.
Q & A Highlights
Q: Can you provide insights on the Leuna biorefinery's ramp-up and its impact on future investments, such as in Rotterdam?
A: Massimo Reynaudo, CEO, explained that the Leuna biorefinery's ramp-up is on track with previous guidance, expecting full production and positive EBIT by 2027. The ramp-up process is typical for biorefineries, involving sequential start-up of different units. The experience at Leuna is separate from potential investments in Rotterdam, which will be assessed based on cost efficiency and market dynamics.
Q: Regarding the Metamark acquisition, what is its impact on Raflatac's business and EBITDA?
A: Tapio Korpeinen, CFO, noted that the acquisition is part of Raflatac's strategy to grow in the graphics segment. The acquisition is expected to be EBITDA accretive, with synergies enhancing growth and competitiveness. The graphics business is high value-added, and the acquisition complements Raflatac's existing operations.
Q: What are the assumptions behind the EBIT guidance range of EUR400 million to EUR625 million for the first half of 2025?
A: Tapio Korpeinen, CFO, highlighted that the guidance considers uncertainties in the macro environment, particularly pulp and electricity prices. The lower end of the range assumes potential negative macroeconomic developments, while the upper end reflects a stable or improving market environment.
Q: Can you elaborate on the debottlenecking plans for the Paso de los Toros mill in Uruguay?
A: Massimo Reynaudo, CEO, stated that the mill reached nominal capacity in Q2 2024. The debottlenecking process involves optimizing current operations and identifying areas for investment to increase output. This process will unfold over more than a year, with initial steps focusing on process tuning.
Q: How is UPM addressing the challenges in the Raflatac business, and what are the expectations for 2025?
A: Massimo Reynaudo, CEO, acknowledged that 2024 performance was below expectations. UPM has implemented organizational and operational changes to improve profitability and competitiveness. These actions are expected to yield results in 2025, with a target to return to double-digit EBIT margins, depending on market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
