UPM Interim Report Q3 2025: UPM business portfolio delivered resilient performance in weak markets

HELSINKI, Oct. 29, 2025 /PRNewswire/ -- 

UPM-Kymmene Corporation Stock Exchange Release (Interim Report) October 29, 2025 at 9:30 EET

Q3 2025 highlights

• Sales totaled €2,298 million (2,521 million in Q3 2024)
• Comparable EBIT decreased by 47% to €153 million, 6.7% of sales (291 million, 11.5%)
• Operating cash flow was €218 million (242 million)
• UPM initiated a strategic review of UPM Plywood to assess options for maximizing the long-term potential of the business
• UPM signed a strategic partnership with Versowood to strengthen pulp wood supply in the tight Finnish markets
• UPM Adhesive Materials announced plans to discontinue production in Nancy, France, and investments to grow in the U.S., Malaysia and Vietnam
• UPM decided to end paper production at UPM Kaukas paper mill, Finland, by the end of 2025 and sold the earlier closed Plattling paper mill site, Germany in October
• The first core process of the Leuna biorefinery was started successfully, achieving stability and industrial-scale production
• UPM received a Platinum rating from EcoVadis, placing the company in the top 1% globally for sustainability performance

Q1-Q3 2025 highlights

• Sales totaled €7,344 million (7,707 million in Q1-Q3 2024)
• Comparable EBIT decreased by 30% to €566 million, 7.7 % of sales (806 million, 10.5 %)
• Operating cash flow was €685 million (782 million)
• Net debt was €3,218 million at the end of September (2,804 million)
• UPM commenced a share buy-back program and repurchased 6 million shares for a total of approximately €160 million
• UPM Communication Papers announced plans to permanently close the UPM Ettringen paper mill in Germany, and streamline its structure
• UPM discontinued the development of the potential refinery in Rotterdam to sharpen the focus in biofuels growth strategy
• UPM was recognized among the top sustainability performers by CDP and S&P Global and was listed as the only forest and paper industry company in the Dow Jones Global and European Sustainability Indices for the years 2024-2025

Key figures

UPM presents certain measures of performance, financial position and cash flows, which are alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definitions of alternative performance measures are presented in » UPM Annual Report 2024

Massimo Reynaudo, President and CEO, comments on the results:

"The third quarter brought some temporary clarity to the terms of international trade, but consumer demand stayed subdued and uncertainty remains. During the quarter, we continued to take decisive actions to further strengthen our competitiveness. Our focus is on improving performance, cash flow and the strength of our balance sheet.

Our businesses in advanced materials and decarbonization solutions improved their third quarter performance compared to the previous year. However, fibres and communication paper businesses were impacted by the unusual volatility in the operating environment, which affected UPM's results negatively.

In Q3 our sales were €2,298 million, lower than in the comparison quarters. Comparable EBIT was €153 million, up 22% compared to the previous quarter but down 47% compared to last year's corresponding period. Operating cash flow was €218 million. At the end of the quarter, our financial position was solid, with a net debt to EBITDA ratio of 2.36.

In UPM Fibres, the low pulp prices resulted in significantly lower EBIT compared to last year. Despite the low cycle market prices, our competitive pulp platform in South America performed well and continued to improve its efficiency. In Q3, Fibres South generated comparable EBIT of €80 million, with an EBIT margin of 22%. After this first full year at nominal capacity for UPM Paso de los Toros and the competitive outbound logistics by rail, improvements will continue. By 2027, the expanded plantation areas will increasingly reach harvesting maturity, enabling us to optimize the wood sourcing and inbound logistics further. Simultaneously, we continue to plan for capex-efficient debottlenecking to unlock further potential of the platform.

In Finland, Fibres North reported a comparable EBIT loss of €37 million, of which the impact of the extended shutdown and maintenance at the Kaukas pulp mill accounted for approximately €30 million. Wood costs reached their highest levels, even though wood market prices started to show the first signs of decline. We continue to take decisive measures to adjust the Finnish pulp operations to the market situation. The announced long-term strategic partnership with Versowood, the largest private producer and processor of sawn timber in Finland, will strengthen our supply of pulpwood and improve the cost efficiency of our wood sourcing in the tight Finnish markets.

Given the significance of the UPM Fibres business and the distinct characteristics of its Fibres South and Fibres North parts, we will provide additional financial information for these two parts of the UPM Fibres reporting segment starting in Q1 2026.

In advanced materials, UPM Adhesive Materials and UPM Specialty Papers demonstrated resilience once again, improving their performance from last year despite the visible effects of global trade tariffs on consumer confidence and demand. UPM Adhesive Materials continued to implement its growth strategy by investing in the U.S., Malaysia and Vietnam. In addition, the business announced plans to discontinue production in Nancy, France in order to increase production efficiency further.

UPM Plywood reported solid results. In September, we announced the strategic review of the business to assess options for maximizing the long-term potential in an evolving market environment. The aim is to determine the best path forward for the plywood business, while also benefiting the value creation for UPM's shareholders.

UPM Communication Papers faced weak demand and was affected by export tariffs. The business decided to permanently cease paper production at the UPM Kaukas mill by the end of the year. The closed Plattling paper mill site was sold in October to a local logistics company, and the sale will positively impact the Q4 cashflow.

In decarbonization solutions, UPM Energy had a good third quarter, with market prices recovering amid solid power consumption in Finland and the Nordics. Optimization of power production in the volatile price environment yielded good results.

UPM Biofuels produced good volumes and the renewable fuel market prices continued recovering. The EU level renewable energy directive (RED III) is expected to support demand and valuation for advanced renewable fuels, pending implementation at the national level legislation.

In Leuna, Germany, the start-up of our groundbreaking biochemicals refinery proceeded. In the first core process, the hydrothermal breakdown of wood into sugar and lignin, we have successfully achieved stability and production levels on an industrial scale. Production and sales of the first commercial products, industrial sugars and lignin-based products are expected to start by the end of the year, and glycol production and sales in the first half of 2026.

Across our businesses, the market environment during the third quarter proved to be challenging. Although uncertainties in trade, currencies and geopolitics continue in the near term, we are determined to stay competitive and pave way for future growth through targeted investments and the pioneering entry in the new biochemicals business. In these efforts, I want to acknowledge the dedication of our teams and the continued trust of our customers."

Profit guidance

UPM's comparable EBIT in H2 2025 is expected to be approximately in the range of €425-650 million (€413 million in H1 2025, and €709 million in H2 2024).

Outlook

The continued significant uncertainties in geopolitics and global trade relations may impact the development of UPM's product deliveries, sales prices, various input cost factors and currency exchange rates.

In H2 2025, compared with H1 2025, UPM's performance is expected to benefit from lower variable costs, including the timing of the annual energy refunds in Q4, and potentially from moderate fair value change of forest assets in Q4. Performance is expected to be resilient in the advanced materials businesses. Pulp prices have started the second half of the year at a lower level than the realized prices during the first half of the year.

In H2 2025, compared with H2 2024, UPM's performance is expected to be held back by lower sales margins for pulp, lower deliveries of communication papers, and higher maintenance activity. Performance is expected to improve in the advanced materials businesses.

The U.S. dollar has been weaker in H2 2025 than during the comparison periods.

Sensitivity to pulp and electricity prices

UPM's comparable EBIT is sensitive to pulp and electricity prices. The figures below represent group earnings sensitivities on annual level.

UPM is a large producer and consumer of chemical pulp. A €50/tonne change in average pulp price would impact annual comparable EBIT by approximately €170 million (net impact: assuming no correlation between pulp and paper prices) to approximately €270 million (gross impact: assuming paper pricing would match changes in pulp costs).

UPM is a large producer and consumer of electricity in Finland and separately hedges part of its electricity sales and purchases. Based on UPM's estimated unhedged net electricity sales position in Finland in 2025, a €10/MWh change in average electricity market price in Finland would impact annual comparable EBIT by approximately €30 million.

Foreign exchange exposure

Fluctuations in monetary policies and economic conditions can significantly impact the value of various currencies, which in turn may affect UPM. Additionally, the escalation of global trade tensions could influence currency exchange rates. These currency fluctuations could impact UPM's cash flow, earnings, or balance sheet, and may also affect the relative competitiveness between different currency regions.

The group's policy is to hedge an average of 50% of its estimated net currency cash flows on a rolling basis over the next 12-month period. At the end of Q3 2025, UPM's estimated net currency cash flows for the next 12 months totaled approximately €1.5 billion. USD was the largest exposure at approximately €1.2 billion, followed by UYU, GBP and CNY. In addition, the earnings of UPM's foreign subsidiaries are translated to euros in reporting. UPM has significant foreign subsidiaries in Uruguay, the U.S. and China. Foreign exchange risks are discussed in UPM's Annual Report 2024 on pages 305-306.

Invitation to UPM's webcast on Q3 2025 Interim Report

A webcast and a conference call for analysts and investors will begin at 13:15 EET. The Interim Report will be presented in English by President and CEO Massimo Reynaudo and CFO Tapio Korpeinen. Participants can follow the webcast online via this link.

Participants wishing to ask questions after the presentation must register for the conference call. To participate in the conference call, please register here. After registering, you will be provided with telephone numbers, a user ID and a conference ID to access the call. To ask a question, press *5 on your telephone keypad to join the queue.

The webcast will be available at www.upm.com for 12 months after the call.

It should be noted that certain statements herein, which are not historical facts, including, without limitation, those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by "believes", "expects", "anticipates", "foresees", or similar expressions, are forward-looking statements. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein including the availability and cost of production inputs, continued success of product development, acceptance of new products or services by the Group's targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group's patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group's products and the pricing pressures thereto, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group's principal geographic markets or fluctuations in exchange and interest rates. The main earnings sensitivities and the group's cost structure are presented on pages 271-272 of the Annual Report 2024. Risks and opportunities are discussed on pages 33-35, and risks and risk management are presented on pages 120-124.

UPM, Media relations
Mon-Fri 9:00-16:00 EET
tel. +358 40 588 3284
media@upm.com

UPM:

UPM is a material solutions company, renewing products and entire value chains with an extensive portfolio of renewable fibres, advanced materials, decarbonization solutions, and communication papers. Our performance in sustainability has been recognized by third parties, including EcoVadis and the Dow Jones Sustainability Indices. We operate globally and employ approximately 15,800 people worldwide, with annual sales of approximately €10.3 billion. Our shares are listed on Nasdaq Helsinki Ltd.

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