UPM-Kymmene Oyj

UPM reported Q2 continuing-operations sales of EUR 2.355 billion, up slightly year over year, and comparable EBIT of EUR 212 million, up 71% year over year, with EBIT margin rising from 5.3% to 9%. Including plywood, total EBIT was EUR 230 million. In the quarter, Fibres South generated comparable EBIT of EUR 101 million, Fibres North posted a EUR 10 million comparable EBIT loss, Communication Papers earned EUR 32 million, and Plywood delivered EUR 16 million comparable EBIT. For the first half, operating cash flow was affected by EUR 339 million of working-capital use, EUR 191 million of investing cash outflow, and EUR 396 million of dividend cash payment. For H2 2026, UPM guided comparable EBIT from continuing operations of EUR 375 million to EUR 575 million; it also said 2026 CapEx guidance remains around EUR 300 million.

Massimo Reynaudo framed Q2 as a milestone quarter in UPM’s transformation, highlighting the Sappi JV and the plywood separation as steps toward a more focused company. He said the new UPM will be more centered on advanced materials, decarbonization solutions, and renewable fibers, with stronger growth potential, better margins, and improved earnings quality. His tone was constructive and confident, but he also stressed execution, margin protection, and preparing for the next phase of portfolio simplification.

Tapio Korpeinen emphasized that the Q2 figures exclude plywood in continuing operations and should be read on that basis. He said variable costs fell year over year in most businesses, fixed costs were down EUR 23 million, and the fair value change of forest assets was negative EUR 24 million versus a stronger comparison last year; sequentially, costs turned more inflationary and fixed costs rose EUR 46 million, partly due to maintenance. He also pointed to EUR 339 million of working-capital outflow in H1, EUR 191 million of CapEx in Q2, and reiterated full-year CapEx guidance of around EUR 300 million. For H2, he flagged higher maintenance activity, additional Leuna ramp-up expense, and said net debt should trend down in the second half.

Analysts focused on Leuna ramp-up timing, energy investments, the WISA demerger targets, Sappi JV timing, pulp pricing, tariffs, and segment sustainability. Management said Leuna is proceeding in line with plan and pointed to breakeven in 2027, while warning that H2 will still carry additional OpEx and depreciation before sales ramp fully. On energy, they said up to 1 GW of new renewables could be developed if market conditions and PPA-backed returns justify it, but not on a merchant basis. On WISA, management said the sales target is achievable without major investment, leverage will start relatively low, and the Sappi JV remains on track despite the EU Phase 2 process and stop-the-clock information requests.