You can follow the weekly development of wood prices on Metsälehti if you wish. Puunhinta - Metsälehti
It was surprising that Storå has business dealings with China’s concentration camp
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Quite a confusing situation so far. Stora Enso did not release any stock exchange or press release about the matter yesterday, but Finnish media reported on the withdrawal from the entire global dissolving pulp segment. This only concerns the Uimaharju pulp mill, as Stora Enso does not produce dissolving pulp anywhere else. It was only in 2017 that a decision was made to invest over EUR 50 million in the Uimaharju pulp mill so that the mill could produce only dissolving pulp, and that investment was completed in late 2019. The underlying idea was likely to extend the lifespan of a medium-sized and relatively old mill by specializing.
From an economic perspective, a possible withdrawal and sunk investments will not significantly rock Stora Enso’s boat, but otherwise, the moves leave a rather unclear picture. We will probably hear something more official from the company about this soon, which will clarify the situation.
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UPM AGM was today:
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It’s quite a confusing announcement, indeed. In Helsingin Sanomat, Parvi still claims that a strategic decision was made last year? There must have been some reason for the dissolving pulp investment, which was just put into use. So, will they continue making regular pulp, or will they sell the Uimaharju mill?
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UPM has some interesting projects underway.
For me, the most prominent vision was one where UPM is a producer of renewable energy sources and alternative raw materials.
Power-to-X sounded really interesting. Does anyone have more information on this?
A considerable change is underway, but if all goes well, stock appreciation should be in sight 
Based on Jussi’s presentation, raw materials from Uruguay come from timber plantations established on former grazing lands. My own perception before this presentation was very different.
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For years, investors and analysts have wondered if UPM and Stora could merge their paper businesses. There are signs in the air that something could actually happen now.
I summarized the steps for a major paper merger in this article: Aika on kypsä suurelle paperifuusiolle | HS.fi (subscribers only.)
In summary:
- Paper is a side business for both companies, and the weak market situation for paper may even be a burden on the companies’ investor story.
- One large paper company would clearly be a more efficient entity than the current ones.
- But what does Solidium say? Solidium’s Antti Mäkinen recently became Stora’s chairman of the board…
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Will it pass the competition authorities?
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Hardly, at least not in the Nordics, and that’s why it would be impossible.
As a UPM shareholder, I certainly would not want to combine UPM’s “good” and Stora Enso’s “weak” paper businesses into one 
(of course, both had one-off items in their results - it still gives a hint) Stora Enso could, however, buy UPM’s British paper mill 
Besides, both probably have different strategies regarding paper → UPM will use up / shut down factories → Stora Enso will convert paper into cardboard.
Paper generates good cash flow for UPM, which is now investing heavily. I see no reason why UPM would want to give up paper at this point.
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Good point! It probably wouldn’t be a cakewalk.
Still, this merger is considered quite possible. I’ve talked to numerous people familiar with the industry, and no one has considered the KKV (Finnish Competition and Consumer Authority) to be such a big problem that it would prevent the entire deal.
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My knowledge and skills are not sufficient to comment on its potential usability and competitiveness.
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https://www.inderes.fi/fi/tiedotteet/upm-julkaisee-ensimmaisen-green-bond-raporttinsa
UPM has today published its first Green Bond Report. The report presents the use of proceeds from the EUR 750 million green bond issued in November 2020, as well as the estimated environmental and other impacts.
The green bond proceeds were allocated to the following two categories:
-
Sustainable Forest Management
This category includes the acquisition, maintenance, and management of certified forests. The total amount used was EUR 672 million, of which EUR 592 million was used for the balance sheet value of forest land areas and EUR 80 million for sustainable forest management costs. -
Climate-Positive Products and Solutions
This category includes costs related to the development, maintenance, and expansion of climate-positive products and solutions. The amount used was EUR 78 million and was allocated to research and development in biochemicals, biocomposites, biofuels, and biomedical businesses.
“Our green finance framework and green bond are an important part of our financing and our Biofore strategy. With this allocation of funds, we promote the goals of the Paris Agreement and contribute to achieving the UN Sustainable Development Goals important to us,” says Tapio Korpeinen, CFO of UPM.
Can anyone explain what the phrase “592 million was used for the balance sheet value of forest land areas” might practically mean?
Ping @Antti_Viljakainen
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It mentions the acquisition of certified forests in that category, so the sum is likely the value of forest land recorded on the balance sheet.
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Most likely. In practice, this issue probably has no practical significance for owners/investors.
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One can only be satisfied that UPM is not involved in these carton businesses where the barrier to entry is low.
(Article behind a paywall)
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Positive profit warning: UPM improves its earnings outlook for 2021
UPM is improving its outlook for 2021. Comparable operating profit is now expected to increase in both the first half of 2021 and for the full year 2021 compared to the corresponding periods in 2020. Previously, the company estimated its comparable operating profit for the first half of 2021 to be lower than in the first half of 2020.
UPM’s comparable operating profit in the first quarter of 2021 was €279 million, on par with a year ago. Pulp demand has remained strong and pulp prices have risen faster than estimated. At the same time, strong market conditions have continued in self-adhesive materials, specialty papers, and energy. Demand and prices for graphic papers have materialized as expected, declining compared to the reference periods.
UPM has also postponed the maintenance shutdown of the UPM Kymi pulp mill from the second quarter of 2021 to the last quarter of the year. The maintenance shutdowns of the UPM Fray Bentos pulp mill and the Olkiluoto power plant will proceed as planned during the second quarter.
UPM is currently in a silent period preceding its interim report. The company will publish its Q1 2021 interim report on April 27, 2021.
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After Q4, the updated consensus was around EUR 220 million, so Q1 significantly exceeded expectations. The preliminary outcome is, in fact, exactly at the comparative period’s level, and in Q2, based on the guidance, UPM will return to earnings growth after six quarters of decline and one tie.
UPM’s beat in Q1, at least compared to my own forecasts, seems to have come especially from Biorefining, Raflatac, and Communications Papers. Energy, Plywood, and Specialty Papers were roughly in line with expectations. Apparently, pulp deliveries have been quite good despite logistics disruptions, and Raflatac had a magnificent quarter in a strong market. At first glance, the biggest mystery, however, is how on earth Communications Papers managed to stay clearly in the black, when demand and prices have fallen, and on the cost side, pulp and recycled paper have gone straight up (though it might be that the increase in costs will only be more visible in Q2). There are certainly savings helping, but that’s a tough move nonetheless. I don’t believe all competitors can do the same.
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Could the closures of the paper mills have an impact? Since they were done from the least profitable end, the relative costs per produced ton have decreased, and at the same time, supply has adjusted better to demand.
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