UPM Interim Report Q1 2026: Good start to the year – excellent performance in decarbonization solutions
Massimo Reynaudo, UPM President and CEO, comments on the results:
“We achieved a good start to the year, even if geopolitical events continued to introduce new uncertainties. Our businesses maintained the focus on performance, and supported by our balanced portfolio, we delivered solid results. Especially our decarbonization solutions showed their strength.
In Q1, our sales totaled €2,505 million. Comparable EBIT was €274 million, 5% lower than last year. Comparable EBIT margin was 10.9%, in line with last year. Net debt at the end of the reporting period totaled €2,962 million and net debt to EBITDA ratio was 2.30
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UPM-Kymmene Corporation Stock Exchange Release (Interim Report) April 29, 2026 at 09:45 EEST
UPM Interim Report Q1 2026:
Good start to the year – excellent performance in decarbonization solutions
Q1 2026 highlights
- Sales totaled €2,505 million (2,646 million in Q1 2025)
- Comparable EBIT decreased by 5% to €274 million, 10.9% of sales (287 million, 10.8%)
- Operating cash flow was €89 million (289 million)
- Net debt totaled €2,962 million (2,954 million) and net debt to EBITDA ratio was 2.30 (1.77)
- UPM Energy achieved record Q1 results supported by the cold winter and record electricity consumption in Finland
- UPM Biofuels continued to improve its performance and posted strong results
- UPM Adhesive Materials announced an investment to a new slitting and distribution terminal near New Delhi, India
- UPM Energy is investing in the modernization of the Tyrvää hydropower plant
- Preparations for the planned graphic paper Joint Venture and the strategic review of UPM Plywood continued
Decarbonization solutions businesses delivered excellent results. UPM Energy achieved its best Q1 results ever, supported by record electricity consumption in Finland and high prices during the winter months. UPM Biofuels continued to improve its performance and posted strong results. At our biochemicals refinery in Germany, the production of industrial sugars and lignin is ongoing and renewable functional fillers production will start in the coming weeks.
Our advanced materials businesses, UPM Adhesive Materials and UPM Specialty Materials, continued to deliver steady, resilient performance. Deliveries increased in both business areas compared to the previous quarter. Markets in Europe and Asia improved somewhat, whereas the U.S. market continued to be challenging. UPM Plywood performed well in stable markets and its results improved from last year.
UPM Fibres improved its underlying performance from the previous quarter on both platforms. The average price of UPM’s pulp deliveries increased slightly. In Fibres North, we started to see the impact of a decline in wood costs. From the beginning of 2026, UPM’s forests in Finland are part of Fibres North, and thus changes in forest fair values are included in the UPM Fibres business area results.
UPM Communication Papers delivered solid results in the context of the challenging paper markets and high energy prices. It increased paper deliveries compared to the previous quarter and succeeded well in optimizing its energy consumption.
Preparations for the planned graphic paper Joint Venture continued. The deal proceeded to phase II of EU merger control, which is a normal step in the Commission’s merger review process in cases where initial concerns have not been fully resolved during Phase I. We continue to engage openly and constructively with the Commission. As communicated earlier, we expect the definitive agreements to be signed during the first half of 2026.
With the ongoing portfolio initiatives in UPM Communication Papers and UPM Plywood, we aim to change the profile of the company, increasing its growth potential and margins. Future UPM would have an attractive portfolio focused on decarbonization solutions, advanced materials and renewable fibres. All these businesses operate in growing markets and have a strong combined track record of realized growth above GDP.
Disruptions in the fossil fuel markets underscore the importance of renewable alternatives, not only for mitigating climate change but also for the resilience of societies and value chains and ensuring supply security. Our decarbonization solutions help customers reduce their dependency on fossil-based materials. This highlights the strength of our balanced business portfolio with solid growth opportunities.
Overall, while geopolitics continue to impact the business environment, the strength of our portfolio and geographic presence provides us with resilience. We are heading towards a period of higher inflation and margin protection will be a priority for us. We will keep our focus on competitiveness, performance, cash flow and successfully completing the strategic portfolio initiatives during this year.”
Profit guidance
UPM’s comparable EBIT in H1 2026 is expected to be approximately in the range of €325-525 million (€413 million in H1 2025, and €508 million in H2 2025).
Outlook
There continue to be significant uncertainties in geopolitics and trade.
In H1 2026, compared with H2 2025, UPM’s performance is expected to benefit from moderately higher sales prices and delivery volumes and moderately lower fixed costs. Performance is expected to be held back by continued weak communication paper markets and increased costs during the early phase of the production ramp-up at UPM Leuna. Currencies have started the year at similar levels, compared with H2 2025. Comparable EBIT in H2 2025 benefited from the timing of energy refunds and increased fair value of forest assets, items that are not expected to take place during H1 2026 in similar quantities.
In H1 2026, compared with H1 2025, UPM’s performance is expected to benefit from lower variable costs and moderately higher delivery volumes. Maintenance activity is expected to be lower than in the comparison period. Performance is expected to be held back by continued weak communication paper markets and increased costs during the early phase of the production ramp-up at UPM Leuna. Currencies at the beginning of the year have been negative to comparable EBIT, compared with H1 2025.
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 €180 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 2026, a €10/MWh change in average electricity market price in Finland would impact annual comparable EBIT by approximately €40 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 Q1 2026, UPM’s estimated net currency cash flows for the next 12 months totaled approximately €1.6 billion. USD was the largest exposure at approximately €1.4 billion, followed by UYU, GBP, CNY and JPY. 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 2025 on pages 313–314.
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