UPM-Kymmene Corporation has lowered its forecasts for 2024, citing declining market demand in most of its business sectors. The company says that, although its comparable EBIT rose by 32% in the third quarter to ?291 million, delivery volumes declined, weighing on its overall results.
The third quarter of 2024 saw a general decline in delivery volumes across the majority of UPM's divisions. The impact was particularly marked in the paper and energy sectors, while the UPM Fibers Division, helped by the smooth operation of the Paso de los Toros mill, showed some resilience. However, the weak pulp market and rising wood costs in Finland had an impact on this performance.
The impact of this decline is reflected in the company's sales, which fell by 2% compared with the same period in 2023, reaching ?2.521 billion in the third quarter. Despite this decline, the improvement in EBIT from ?220 million to ?291 million enabled UPM to maintain positive results.
Fluctuations in pulp prices are a key factor influencing UPM's results. In 2024, lower pulp prices, combined with higher production costs due to the price of wood in Finland, reduced margins in several areas. Although production at the Paso de los Toros mill reached full capacity after its first maintenance, this was not enough to offset the overall impact of lower prices.
Despite this, the fiber sector remains one of the most profitable, with EBIT of ?190 million for the third quarter, a marked improvement on the loss of ?18 million in the same quarter of the previous year.
Communication papers, another key area for UPM, suffered from lower sales volumes, with sales down to ?751 million in the third quarter from ?807 million in 2023. However, the sector continues to generate profits, albeit significantly down on the previous year.
UPM now expects comparable EBIT for 2024 to be similar to, or even slightly higher than, that of 2023, despite the challenges encountered in several of its markets.
