Upm-kymmene Oyj Stock Earnings Reports

UPM reported Q3 2025 comparable EBIT of EUR 153 million (EBIT margin 6.7%), up 21% sequentially but down 47% year-on-year. Performance was mixed across segments: Advanced Materials and Decarbonization Solutions improved year-on-year, while Renewable Fibres and Communication Papers were hit by unusually volatile market conditions (notably very low pulp prices and elevated wood costs). Key drivers: lower sales prices (c. EUR 190 million headwind vs. prior year), higher wood costs (peaked in Q3), maintenance shutdowns (Kaukas in Q3; Fray Bentos in Oct impacting Q4), and stable-to-declining demand in communication paper markets. Cash flow: operating cash flow EUR 218 million; net debt EUR 3.218 billion (net debt/EBITDA 2.36x) — above the company policy target of 2x, with management aiming to bring it below 2x through profitability improvements, working capital release and cash conversion. Actions and strategic moves: planned closures of Kaukas (Finland) and Ettringen (Germany) paper mills by year-end, cutting c. 570,000 tonnes (13%) of paper capacity and about EUR 70 million in annual fixed costs; split disclosure of Fibres into Fibres South (Uruguay/Latin America) and Fibres North (Nordics) going forward, with Fibres South delivering strong competitiveness at low pulp prices (Fibres South Q3 EBIT EUR 80 million; 22% margin) and ongoing cost reduction roadmap (targeting roughly USD 25–30/tonne additional improvement by 2027); strategic partnership with Versowood to secure pulpwood/chips supply in Finland; ongoing efficiency and footprint moves in Advanced Materials and Specialty Papers; strategic review of Plywood (possible separation options) to be completed by end-2026; Biofuels and Leuna biochemical plant ramping with first commercial sugar and lignin sales expected in Q4 and glycols in H1 2026, and full production/positive EBIT targeted in 2027. Outlook unchanged: H2 2025 comparable EBIT expected EUR 425–650 million, with Q4 supported by annual energy refunds and likely forest fair value increase (likely similar or below 2024 levels).