Sales of $4.7 billion in the first quarter of 2018 were up 5 percent compared to the year-ago period. Changes in foreign currency exchange rates benefited sales by 3 percent. Organic sales improved 2 percent, as volumes increased 3 percent while net selling prices were down 1 percent. In North America, organic sales increased 3 percent in consumer products and 2 percent in K-C Professional. Outside North America, organic sales rose 2 percent in developed markets and 1 percent in developing and emerging markets. First quarter operating profit was $247 million in 2018 and $848 million in 2017. Results in 2018 included $577 million of charges related to the 2018 Global Restructuring Program. First quarter 2018 adjusted operating profit was $824 million. Results were impacted by $175 million of higher input costs, driven by a $105 million increase in pulp and a $45 million increase in other raw materials. The operating profit comparison was also affected by lower net selling prices. Click Read More below for additional information.
UPM has decided to close 305,000 tonnes of graphic paper capacity in Europe. The company permanently closes the paper machine 3 at UPM Steyrermühl, Austria and the paper machine 2 at UPM Augsburg, Germany. The decision is based on the plan announced in November 2016.
The employee consultation processes were conducted in line with the local legislations and have now been finalised. The number of persons affected is 143 for UPM Augsburg and 125 for UPM Steyrermühl. The SC paper machine 3 in Steyrermühl will be permanently closed at the end of Q1 2017. In Augsburg the production on the SC paper machine 2 was stopped already in the end of 2016. Both mill sites continue their paper production on the remaining cost-competitive paper machines.
“We understand the disappointment of our employees in Steyrermühl and Augsburg. Due to adverse market conditions continuously challenging us, we have to adjust our operations to meet the demand and to ensure a competitive future of our remaining paper assets. We conducted constructive and fair employee consultation processes at both mills, in order to diminish the impact of the closures on the personnel,” says Anu Ahola, Senior Vice President, News & Retail, UPM Paper ENA.
The closure of both machines would result in annual cost savings of approximately EUR 30 million. UPM booked charges of EUR 64 million as an item affecting comparability in Q4 2016.