#Finland #UPM Raflatac #Helsinki #UPM Kymmene Corporation #UPM Biochemicals

UPM's 2024 Financial Statements: Key Highlights and Strategic Actions

In the recent financial statements released by UPM-Kymmene Corporation on February 5, 2025, the company outlined its performance for the year 2024, shedding light on both achievements and challenges faced in a dynamic market environment. Overall, the financial indicators illustrate significant maneuvers aimed at enhancing growth, managing costs, and delivering shareholder value.

Q4 2024 Performance Highlights

UPM showcased a robust financial performance in the fourth quarter of 2024, with sales increasing by 4%, reaching EUR 2,632 million compared to EUR 2,531 million in Q4 2023. The comparable EBIT saw a remarkable rise of 29%, amounting to EUR 418 million with a healthy 15.9% margin. Additionally, the company reported a solid operating cash flow of EUR 570 million, which demonstrates a positive cash generation capability.

During this period, several strategic initiatives were undertaken:

• - UPM Biochemicals initiated the commissioning of a new biorefinery, with commercial production slated to commence in H2 2025, marking a significant investment in renewable solutions and sustainability.
• - UPM Fibres established a streamlined operational model in Finland, aiming to maintain the profitability of their operations despite challenging market conditions.
• - In light of market adjustments, UPM Communication Papers ceased operations at one of its paper machines in Germany, part of a larger strategy to align production with current demand levels.

Annual Overview and Strategic Measures

For the entirety of 2024, UPM reported a slight decrease in sales by 1% to EUR 10,339 million, down from EUR 10,460 million in 2023. However, the comparable EBIT increased by 21%, reaching EUR 1,224 million, reflecting a successful focus on operational efficiency and cost management.

The company's net debt rose to EUR 2,869 million, with a net debt to EBITDA ratio of 1.66, signaling a need for ongoing attention to capital structure management. Notably, UPM has positioned itself well with cash and unused credit facilities amounting to approximately EUR 3.2 billion, which reinforces its liquidity position.

Moreover, UPM’s Board of Directors proposed a consistent dividend of EUR 1.50 per share, examining further shareholder returns through the initiation of a share buyback program targeting about 1.1% of total shares to be repurchased.

CEO Insights on Future Directions

Massimo Reynaudo, President and CEO, provided insights into the strategic direction going forward, acknowledging both the successes and the hurdles faced. He indicated that 2025 will be a pivotal year for UPM, with the new pulp mill in Uruguay operating at full capacity, which is expected to enhance production significantly. The ongoing focus will be on:

• - Accelerating growth in key segments such as renewable fibers and advanced materials while optimizing cost structures across operations.
• - Streamlining the product portfolio and enhancing competitiveness post-acquisitions in the graphics solutions sector.
• - Deploying strategic measures for cost reduction and market adaptation, especially in the face of fluctuating pulp and energy prices.

Reynaudo also highlighted the improvements anticipated within the biofuels segment due to favorable market conditions and reduced variable costs.

Conclusion

As UPM navigates through evolving market landscapes, its commitment to sustainability and innovation remains at the forefront. The initiatives set in motion in 2024 establish a strong foundation as the company strives for enhanced operational performance and growth in 2025 and beyond. The focus on renewable resources and the strategic management of its portfolio bode well for UPM's prospects, enabling it to adapt to challenges while seizing new opportunities in the industry.