UPM: Energy and biofuels drove performance – investments continue in energy and advanced materials

Forest industry company UPM-Kymmene Oyj started 2026 with stable results, although sales and operating cash flow declined from the previous year. Energy and biofuels businesses delivered strong performance, and the company continued investments in energy production and advanced materials.

Sales in the first quarter of 2026 totaled €2,505 million, compared with €2,646 million a year earlier. Comparable EBIT decreased by 5% to €274 million, while the EBIT margin remained nearly unchanged at 10.9%.

Operating cash flow declined significantly from the comparison period to €89 million (€289 million). Net debt at the end of the reporting period totaled €2,962 million, and the net debt-to-EBITDA ratio increased slightly.

Record performance in energy supported by cold winter

UPM’s energy business achieved its best-ever first-quarter result. The performance was supported by exceptionally high electricity consumption and high prices during the winter months in Finland. The role of energy production was clearly visible in the group’s overall profitability.

The biofuels business also continued to improve its profitability and delivered strong results. Production at the company’s biochemicals refinery in Germany is ongoing, and new renewable products are expected to enter production in the coming weeks.

President and CEO **Massimo Reynaudo highlighted the growing importance of decarbonization solutions in the company’s business portfolio.

Investments in energy production and logistics

UPM announced several investments during the reporting period related to energy production and distribution infrastructure.

UPM Energy is modernizing the Tyrvää hydropower plant in Finland, while UPM Adhesive Materials is investing in a new slitting and distribution terminal near New Delhi, India. The investment strengthens the company’s supply chain in growing markets.

Preparations for the planned graphic paper joint venture continued, and the strategic review of the plywood business is ongoing.

Pulp and paper businesses remained stable

UPM Fibres improved its performance from the previous quarter, and the average price of pulp deliveries increased slightly. Declining wood raw material costs began to support cost competitiveness, particularly in Northern Europe.

The paper business delivered solid results despite challenging market conditions and high energy prices. Paper deliveries increased compared with the previous quarter, and energy consumption was successfully optimized.

UPM Plywood also improved its results in stable market conditions.

Outlook: cost pressures easing but market uncertainty continues

UPM expects comparable EBIT for the first half of 2026 to be in the range of €325–525 million.

Performance is expected to benefit from slightly higher sales prices and delivery volumes as well as somewhat lower variable costs. However, continued weakness in communication paper markets and increased costs related to the ramp-up of the Leuna biochemicals refinery are expected to weigh on profitability.

The company continues to see significant uncertainty in geopolitics and global trade conditions.