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Interim report Q4/2014: UPM reports strong earnings momentum, record strong balance sheet

Q4 2014 compared with Q4 2013

• Earnings per share excluding special items were EUR 0.32 (0.27), and reported EUR 0.01 (0.06)
• Operating profit excluding special items increased to EUR 230 million, 9.1% of sales (207 million, 8.0% of sales)
• UPM announced a new profit improvement programme, targeting annualised EUR 150 million impact by the end of 2015
• Net debt decreased to the record-low level of EUR 2,401 million (3,040 million)
• The UPM Lappeenranta Biorefinery started commercial production of advanced renewable diesel in January 2015

Full year 2014 compared with 2013

• Earnings per share excluding special items were EUR 1.17 (0.91), and reported EUR 0.96 (0.63)
• Operating profit excluding special items increased to EUR 847 million, 8.6% of sales (683 million, 6.8% of sales), due to the success of the EUR 200 million profit improvement programme
• Growth projects in pulp, labelling materials and self-adhesive labels proceeded well and will be completed during 2015
• Operating cash flow was strong at EUR 1,241 million (735 million)
• The Board proposes an increased dividend of EUR 0.70 (0.60) per share

Key figures Q4/2014 Q4/2013 Q3/2014 Q1-Q4/2014 Q1-Q4/2013
Sales, EURm 2,531 2,588 2,415 9,868 10,054
EBITDA, EURm 330 302 346 1,287 1,155
   % of sales 13.0 11.7 14.3 13.0 11.5
Operating profit (loss), EURm 71 134 236 674 548
   excluding special items, EURm 230 207 235 847 683
   % of sales 9.1 8.0 9.7 8.6 6.8
Profit (loss) before tax, EURm 57 115 214 667 475
   excluding special items, EURm 216 188 213 774 610
Profit (loss) for the period, EURm 8 36 182 512 335
Earnings per share, EUR 0.01 0.06 0.34 0.96 0.63
   excluding special items, EUR 0.32 0.27 0.32 1.17 0.91
Return on equity, % 0.4 1.9 9.7 6.9 4.5
   excluding special items, % 9.2 7.5 9.1 8.3 6.4
Operating cash flow per share, EUR 0.86 0.49 0.57 2.33 1.39
Equity per share at end of period, EUR 14.02 14.08 14.33 14.02 14.08
Gearing ratio at end of period, % 32 41 36 32 41
Net interest-bearing liabilities at end of period, EURm 2,401 3,040 2,726 2,401 3,040

Jussi Pesonen, President and CEO, comments on Q4 and full year 2014 results:

"UPM showed good performance in the fourth quarter of 2014, finishing the year with strong earnings momentum. In 2014, our operating profit improved by 24% year-on-year thanks to the successful actions we have taken to improve profit. Return on equity excluding special items was 8.3% for the full year and operating cash flow per share was EUR 2.33.

I'm especially pleased with our excellent cash flow. Following the consistently strong cash flow, our balance sheet at the end of 2014 was stronger than ever in the company's history.

All six UPM business areas performed well in 2014 and four of them reached or exceeded their long-term return targets.

Year 2014 also contained several milestones in UPM's growth projects. The expansion projects in pulp, labelling materials and self-adhesive labels that were started in 2014 are all well on track and will be completed during 2015. The Lappeenranta Biorefinery started commercial production of advanced renewable diesel in January 2015 – a historic moment after eight years of R&D, piloting and construction.

Today, UPM's Board of Directors decided on a new dividend policy targeting a dividend of 30-40% of UPM operating cash flow per share. Based on this policy, the Board's proposal for the 2014 dividend is EUR 0.70 per share.

With good performance in our businesses, strong cash flow and a leading balance sheet in the industry, we are in a unique position to be able to simultaneously distribute an attractive dividend, implement focused growth projects and act on strategic opportunities."

Outlook for 2015

The improved profitability achieved in 2014 is expected to continue in 2015, and we have prospects to improve further. Our profitability is underpinned by the EUR 150 million profit improvement programme, as well as the first positive impacts from the company's growth projects. Profitability is affected by lower publication paper prices and lower electricity sales prices in the beginning of the year. The current weakened euro and lower oil price are supportive for the company's earnings.
www.upm.com

 

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