Helsinki (News release) -- UPM-Kymmene's comparable EBIT declined 31% year-on-year to Euro 126 million in Q2 2025, driven by weaker demand and lower prices for pulp and communication papers. Group sales fell to Euro 2,400 million from Euro 2,546 million a year earlier, while operating cash flow dropped to Euro 179 million from Euro 204 million. According to UPM-Kymmene Corporation, trade tensions disrupted deliveries, especially in China and the U.S., while the weakened U.S. dollar further reduced earnings.

In H1 2025, total sales reached Euro 5,046 million, with comparable EBIT down 20% to Euro 413 million. Net debt rose to Euro 3,310 million from Euro 2,763 million at the end of June, increasing the net debt to EBITDA ratio to 2.12. Operating cash flow for the first half fell to Euro 468 million from Euro 539 million a year earlier.

The pulp and paper segments were hit hardest. Pulp deliveries to China slowed amid tariff-driven uncertainty and resumed later in Q2 at reduced prices. Maintenance shutdowns at the Paso de los Toros and Kymi mills also constrained volumes. UPM extended the Kaukas pulp mill shutdown to two months due to high wood costs and may curtail Finnish pulp production further if needed.

Communication papers saw continued weak demand and falling prices, particularly from U.S. customers. Currency movements worsened profitability. UPM plans to permanently close paper production at its Kaukas mill and proceed with the Ettringen mill shutdown, cutting total paper capacity by 570,000 tonnes, 13% of the group's total.

Advanced materials proved more resilient. UPM Adhesive Materials continued growing sales and expanding in Southeast Asia and the Americas. Specialty Papers faced weak demand and low pricing in China and the U.S. but responded with cost-saving measures. UPM Biofuels posted record deliveries and broke even despite low market prices, while discontinuing its Rotterdam refinery project to focus on Lappeenranta and new feedstock technologies.

In biochemicals, the Leuna refinery launched its first of three key processes, with full start-up expected by year-end. UPM Energy recorded a seasonally weak quarter due to low electricity prices in the Nordics but saw signs of growing Finnish electricity demand.

Looking ahead, UPM forecasts H2 2025 comparable EBIT in the range of Euro 425-650 million, versus Euro 413 million in H1 and Euro 709 million in H2 2024. It expects lower variable costs and improved advanced materials performance to support results, although pulp margins, communication paper volumes, and increased maintenance activity may weigh on profits. The company also noted a weaker U.S. dollar at the start of H2.

Currency exposure remains high, with Euro 1.2 billion of UPM's Euro 1.5 billion net cash flow forecast for the next 12 months tied to the dollar. UPM hedges about half of this exposure. Changes in pulp and electricity prices remain key profit drivers, with a Euro 50/tonne pulp price change impacting EBIT by Euro 170-270 million annually, and a Euro 10/MWh electricity change affecting EBIT by Euro 30 million.