UPM - Sales increased by 10 per cent

Jussi Pesonen, UPM’s President and CEO, comments on the result of the first quarter of 2010:

"UPM's operating profit improved clearly from the same period last year due to higher delivery volumes across all of our businesses and lower raw material costs. The Uruguayan operations were for the first time reported for a full quarter and contributed positively to the result.

Our first quarter sales increased by 10% from the same period last year. What is especially positive is that despite the clear increase of delivery volumes our fixed costs remained the same. However, our profitability continues to be unsatisfactory and everyday efforts to improve the situation will continue.

In Paper, delivery volumes improved especially in Asia and North America. The Paper business made an operating loss with average paper prices decreasing and fibre costs increasing from the same period last year. However, we succeeded in increasing the prices of fine and speciality papers due to good demand.

The results of Energy and Pulp business areas improved as we were able to take advantage of the good market situation. Also Label business continued the positive development which started last summer.

The Finnish stevedores' strike in March impacted all of our businesses negatively. The estimated direct impact of the strike totals about EUR 20 million affecting the first and second quarters of the year. The strike also had significant indirect impacts and we lost orders.

The volatility of the fibre markets raises concerns. The Finnish wood market was inactive at the beginning of the year. If the situation continues, it will first affect our Timber and Plywood businesses.

The recovery of advertising in print media is slow. Increased investment activity has not yet started to fully impact our businesses. However, paper demand in Europe is forecast to recover from 2009 and our paper deliveries are expected to be higher than last year. A similar development is taking place also in our other businesses.

We seem to have passed the bottom of demand and price cycle in our businesses. Therefore we expect the operating profit for 2010 to improve clearly from last year. However, variable costs are expected to increase by about 2% from last year", says Pesonen.