Further decline in UPM-Kymmene’s plywood business

06.08.2020 − 

UPM-Kymmene had to put up with another reduction in its plywood division’s sales volume to the tune of 10.4 % in the second quarter to around 173,000 m³. UPM had sold and delivered the same volume in the first quarter, falling roughly 12 % short of the previous year’s figure. UPM attributed the reduction at the start of the year partly to the four-week strike in Finland and the ensuing losses in output. According to the quarterly report published on 23 July, business in the second quarter was impaired above all by the corona crisis. In the birch-plywood business, significant losses occurred in business with industrial customers. The volume of sales of birch plywood was less affected in the building sector. UPM reports largely steady demand in the softwood-plywood segment, too.

Sales revenue generated by UPM in its “Plywood” division in the second quarter fell by 13.3 % to 104m €. In addition to the lower volumes, plywood price also fell in the period under review, which in turn impaired the results. At 18m €, comparable EBITDA was 5.3 % lower than a year earlier. Comparable EBIT fell by 15.4 % to 11m €, and the corresponding margin to 10.4 %. The operating result even slipped into the red at -12m €. Responsible for this were extraordinary costs of 22m €, which arose in connection with the planned closure of the Jyväskylä production facility in Finland on 31 July. At the beginning of June, UPM had announced the permanent closure of the works geared to birch and spruce plywood.

In its “Biorefining” division, which covers the pulp, biofuel, and sawnwood activities, UPM generated sales revenue of 563m €. This equates to a reduction of 20.5 %. Although the volume of pulp sales was raised by 7.5 % to 943,000 t, it only slightly compensated for the roughly 26 % lower pulp price than in the same quarter of last year. The average price in the second quarter was 3 % higher than in the first. Demand in the sawnwood segment is described as consistently weak without giving any specific figures. Business in biodiesel and naphtha continues to be rated as positive. In this division, comparable EBITDA was 44.3 % lower than a year earlier at 113m €. Like comparable EBIT, the operating result also fell, by 56.5 % to 70m €; the margin calculated on this basis amounted to 12.4 %.

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