UPM: expect prices rises in H2

Jo Francis
Thursday, July 22, 2021

UPM has reported a strong Q2 performance at its Raflatac label division and in speciality papers, while demand for graphic papers jumped by 28% compared to last year.

UPM Raflatac and Specialty Papers benefited from consumer trends, e-commerce and retail
UPM Raflatac and Specialty Papers benefited from consumer trends, e-commerce and retail

The Finland-headquartered biomaterials group said that Q2 demand for its products in general was strong, with a “rapid recovery” of earnings.

Sales were up 15% in Q2 to €2.384bn (£2.04bn), and up 6% for the first half ending 30 June at €4.618bn. 

Q2 EBIT jumped by 51% to €307m, with EBIT margins increasing from 11% to 12.7% in H1. 

President and CEO Jussi Pesonen said: “In the exceptional economic environment, demand for UPM’s products was strong, and overall, our price increases more than offset rising input costs. At the same time, our transformative growth projects continued on schedule and on budget, and we are in an excellent position going forwards.”

However, the quarter was “very challenging for UPM Communication Papers” in terms of profit, due to rapidly rising input costs and market prices for publication papers based on January contracts. 

“Sales prices for many UPM products are expected to increase in H2 2021 from H1 2021, including graphic paper prices in Europe,” Pesonen stated. 

Pulp sales prices “increased rapidly” in the first six months of 2021 and are expected to be higher on average in the second half of the year. 

UPM Raflatac and UPM Specialty Papers benefited from “strong markets and good profitability” thanks to recent trends in consumer behaviour, e-commerce and retail, Pesonen said. 

Labelling materials and specialty papers make up nearly a third of group sales. 

“Once again, UPM Raflatac had a great quarter, despite exceptional pressure on input costs. These excellent results are not only due to strong market demand but also agile margin and mix management, as well as unrelenting focus on efficiency,” he said. 

UPM Raflatac has just completed a consultation on simplifying its organisation and improving operational and distribution efficiencies. 129 jobs will go in Europe as a result.

UPM announced the sale of its Shotton newsprint mill in North Wales to Eren Paper in May, with the sale to be completed in Q3. 

The group joined The Climate Pledge initiative in February, and has committed to reach the targets of the Paris Agreement 10 years in advance. The cross-sector community of global businesses includes Amazon. 

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