Finnish forest products company UPM closed 2025 with improved fourth-quarter performance and robust cash generation. The company also revealed plans for a significant joint venture with Sappi that would reshape the European graphic paper landscape.
Fourth Quarter Performance
Despite a year marked by geopolitical tensions and trade uncertainties, UPM achieved visible improvement across most business units in the final quarter. Cash flow generation was particularly strong, reflecting disciplined capital management and operational improvements.
The company's diversified portfolio helped offset weakness in some segments:
- Fibres South: Delivered strong results with effective cost management
- Fibres North: Improved from previous quarter, though high wood costs and weak softwood pulp prices weighed on profitability
- Specialty Papers: Achieved good results with year-over-year improvement
- Communication Papers: Matched prior year Q4 performance despite ongoing market decline
Capacity Reductions Executed
UPM followed through on announced restructuring during the quarter. The company stopped production at its Kaukas mill in Finland and its Ettringen facility in Germany. These closures reduced UPM's paper production capacity by 13%.
Sappi Joint Venture Details
UPM signed a non-binding letter of intent with South African-based Sappi to combine their European graphic paper businesses. Key transaction elements include:
- 50/50 ownership structure between UPM and Sappi
- Enterprise value of approximately 1.42 billion euros before synergies
- UPM to receive 613 million euros cash payment at closing
- Combined entity will have greater scale to manage market decline
Original Source
This article is based on information from PaperAge. For complete details and updates, please refer to the original source.