UPM reports good performance and record cash flow – Uruguay investment drives significant future earnings growth

Q4 2019 highlights
•Sales decreased by 10% to EUR 2,447 million (2,731 million in Q4 2018) due to lower pulp price and lower deliveries of graphic papers
•Comparable EBIT decreased by 15% to EUR 343 million (404 million)
•Record quarterly operating cash flow at EUR 592 million (384 million)
•Net debt decreased to EUR -453 million (-311 million at the end of 2018, before adoption of IFRS 16 Leases)
•Record cash flow in UPM Communication Papers and UPM Raflatac, record comparable EBIT in UPM Specialty Papers
•UPM Specialty Papers expansion at UPM Changshu was completed, and the ramp-up of the converted paper machine at UPM Nordland started
•UPM announced an investment in Combined Heat and Power (CHP) plant at UPM Nordland paper mill in Germany

2019 highlights
•Sales decreased by 2% to EUR 10,238 million (10,483 million in 2018)
•Comparable EBIT decreased by 7% to EUR 1,404 million (1,513 million)
•Record annual operating cash flow at EUR 1,847 million (1,330 million)
•The Board proposes a dividend of EUR 1.30 (1.30) per share, 38% of operating cash flow per share
•UPM announced a USD 2.7 billion investment in a 2.1 million tonne eucalyptus pulp mill near Paso de los Toros, Uruguay
•UPM reduced a total of 620,000 tonnes of graphic paper capacity in 2019 and started a consultation process for selling or closing further 240,000 tonnes of newsprint capacity
•UPM was selected as UN Global Compact LEAD participant and received several top recognitions for its sustainability performance including Dow Jones Sustainability Index, MSCI AAA rating and CDP A listing

Jussi Pesonen, President and CEO, comments on Q4 and full year 2019 results:

“The year 2019 was a milestone year in UPM’s strategic transformation. In July, we made the decision to build a highly competitive pulp mill in central Uruguay to drive a step change in UPM’s future earnings, as well as in the scale of UPM’s pulp business. At the same time, all our businesses continued developing product innovations beyond fossils. Biochemicals and biofuels businesses are at the forefront of this development.

In 2019, our business performance continued at a good level despite the slowing economic growth. We were able to maintain stable margins throughout the year and achieved a record-strong cash flow. This was a good achievement given the erosion of our product prices during the second half of the year.

Our 2019 sales decreased by 2% and comparable EBIT fell by 7%. Our operating cash flow increased by more than half a billion euros to EUR 1,847 million and we finished the year with a record-low negative net debt of EUR -453 million. I would like to sincerely thank all UPMers for making 2019 a success.

In the fourth quarter of the year our sales decreased by 10%, mainly due to the fall in pulp sales prices and graphic paper deliveries. Margins and profits remained at the level of the two previous quarters, but comparable EBIT decreased by 15% from Q4 in the previous year. We achieved a new quarterly record with an operating cash flow of EUR 592 million.

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