UPM-Kymmene Oyj

UPM reported Q2 2026 sales from continuing operations 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 improving from 5.3% to 9%. Including plywood, total EBIT was EUR 230 million. Key segment results included Fibres South comparable EBIT of EUR 101 million, Fibres North a EUR 10 million loss, Communication Papers EBIT of EUR 32 million, and Plywood comparable EBIT of EUR 16 million. For the first half of 2026, management reiterated full-year CapEx guidance of around EUR 300 million, and for H2 2026 it guided comparable EBIT of EUR 375 million to EUR 575 million on a continuing-operations basis. Tapio said H2 will face moderately higher sales prices and variable costs, around EUR 40 million more maintenance impact versus H1, and higher Leuna operating expenses ahead of the sales ramp-up; UPM also expects net debt to come down in the second half.

Massimo Reynaudo framed the quarter as an important step in UPM’s transformation, saying the company is becoming a more focused advanced materials and decarbonization solutions company with stronger growth prospects and better earnings quality. He emphasized that all businesses improved, cost discipline held up in an inflationary environment, and the portfolio changes should raise growth potential, margins, and balance across cycles. His tone was constructive and strategic, with repeated focus on execution, portfolio simplification, and long-term value creation.

Tapio Korpeinen focused on the mechanics behind the numbers and the guidance. He said sales from continuing operations were EUR 2.355 billion and comparable EBIT was EUR 212 million, while fixed costs fell EUR 23 million year over year but rose EUR 46 million sequentially, and maintenance reduced EBIT by about EUR 55 million in Q2. He also said first-half working capital absorbed EUR 339 million, investing cash outflow was EUR 191 million, and the first dividend installment was EUR 396 million, which pushed net debt higher in the quarter; he expects net debt to decline in H2. For the outlook, he highlighted more maintenance in H2, higher Leuna costs before ramp-up, and smaller valuation gains on forest assets versus last year.

Analysts pressed management on Leuna’s ramp-up costs, the timing of breakeven, and why expenses rise ahead of EBITDA improvement; management said the business is tracking to plan, with capacity and breakeven targeted for 2027, but H2 2026 will still see more OpEx and depreciation before sales meaningfully offset them. Questions also focused on the 1 GW renewable power opportunity, where management said investment would depend on a derisked PPA-backed structure and required returns above cost of capital. On the Sappi JV, management denied any delay in the regulatory process, saying the Phase 2 review in Europe is normal and final resolution is still expected by year-end. Analysts also asked about pulp pricing spreads and tariffs; management said regional spreads should eventually normalize and that the U.S.-Canada tariff situation remains uncertain.