UPM-Kymmene Oyj

UPM reported Q2 sales from continuing operations of EUR 2.355 billion, up slightly, and comparable EBIT from continuing operations of EUR 212 million, up 71% year on year. EBIT margin improved from 5.3% to 9%. Including plywood, total EBIT was EUR 230 million. On a business basis, Fibres South posted comparable EBIT of EUR 101 million (24% margin), Communication Papers EUR 32 million (5% margin), and Plywood EUR 16 million (14% margin); Fibres North posted a EUR 10 million loss. For H1 2026, management guided comparable EBIT for continuing operations to EUR 375 million to EUR 575 million in the second half, versus EUR 471 million in the first half. For full-year 2026 capex, Tapio said guidance is around EUR 300 million. Management also said H2 will see moderately higher sales prices and variable costs, around EUR 40 million higher maintenance impact versus H1, and additional headwind from Leuna ramp-up costs.

Massimo Reynaudo framed the quarter as a milestone period in UPM’s transformation, highlighting the signed Sappi definitive agreement and the progress toward separating Plywood into WISA Group. His message was that UPM is becoming a more focused advanced materials and decarbonization company with better growth prospects and earnings quality. He sounded constructive on the portfolio shift, saying the new mix should offer stronger growth, better margins, and a more balanced earnings profile across cycles.

Tapio Korpeinen emphasized that the reported continuation-operations figures exclude Plywood because of the demerger accounting treatment, and warned against comparing those numbers directly with historical UPM totals. He detailed the quarter drivers: variable costs declined versus last year, prices were flat overall with strength in energy and biofuels, fixed costs fell EUR 23 million year on year, and the forest asset fair value change was negative EUR 24 million. He also said first-half working capital absorbed EUR 339 million, investing cash outflow was EUR 191 million, dividend cash out was EUR 396 million, and net debt rose in Q2 but is expected to decline in H2; he reiterated full-year capex of around EUR 300 million.

Analysts focused on Leuna ramp-up costs, energy investment returns, WISA Group targets, the Sappi JV timetable, pulp market pricing, tariffs, and whether Adhesive Materials’ strength reflected restocking. Management said Leuna should continue to weigh on EBIT in H2, with breakeven/production capacity expected in 2027, while energy investments would only be made if customer demand, PPA structure, and returns justify them. On the JV, management said the process is proceeding as planned with no delay despite the stop-the-clock notice in Europe, and on Adhesive Materials it said Q2 included some pre-buying but much of the strength came from self-help and restructuring benefits that should persist.