CEO Jussi Pesonen said that customer deliveries had started smoothly after the end of the long-running strike action in Finland in April. 

Q2 sales were up 7% at €2.56bn (£2.18bn), while comparable EBIT jumped by 26% to €387m. 

“This was a great achievement taking into account that during the first half we only had one month of normal full production,” Pesonen stated.

“For the full year, we expect to reach a new record of annual earnings.”

In H1, sales were up 10% at €5.07bn while EBIT increased by 13% to €664m. 

However, operating cashflow was -€879m and net debt ballooned to €2.69bn (2021: €750m) due to the “unprecedented rise in energy future prices” and the timing impact on cash flows from UPM’s energy hedges. 

This is expected to reverse in future and UPM said a “significant part” of the net debt was temporary.

At Communication Papers, UPM said that significantly higher sales prices had “more than offset” the negative impact of higher variable costs. 

Year-on-year, average prices for paper deliveries in Q2 were up 77%, and were up 14% on Q1. 

Communication Papers had sales of €2.02bn in H1 (2021: €1.68bn) and operating margins improved enormously, from 0.6% to 11.1%.

In Q2 operating margins at the division were 13.6%. 

UPM delivered 2.11m tonnes of paper in the period, compared with 2.89m tonnes in 2021. 

At self-adhesive labels unit UPM Raflatac, selling prices were higher in Q2 compared with the prior year, but delivery volumes were lower. EBIT was up on Q1, which was affected by a provision for expected credit losses at its Russian business, where sales have been discontinued. 

Sales at Raflatac were €479m in Q2 (2021: €413m) and operating margins were 12.8% compared with 14.9% the prior year. 

Raflatac sales for H1 were €930m.

At UPM Specialty papers, Q2 sales were €357m (2021: €361m) while operating margins slipped year-on-year from 10.8% to 8.5%. 

Sales in the first half at Specialty Papers were €734m.

At pulp and timber division UPM Fibres pulp production and delivery volumes were lower year-on-year due to the strike and scheduled maintenance shutdowns at two pulp mills. 

Selling prices were higher. 

Q2 sales were €584m (2021: €682m). Sales at the half-year slipped from €1.25bn to €988m, while operating margins fell from 21.7% to 7%.

Regarding the outlook, UPM said that “significant uncertainties” remained including the war in Ukraine, the ongoing impact of the Covid-19 pandemic, and energy prices and availability in Europe. 

UPM stated that the impact of the strike action is not expected to be material in its full-year results.

UPM also has a circa 31% stake in a new nuclear power plant project at Olkiluoto in Finland, where the start-up has been delayed to December.

Despite the record results, UPM’s earnings missed the expectations of some analysts. Its share price slipped by 2% to €29.77 on the news.   

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