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Paper maker UPM posts $245 million Q3 profit

Paper maker UPM posts $245 million Q3 profit

October 28th, 2010 by By MATTI HUUHTANEN, Associated Press in News

HELSINKI (AP) - UPM-Kymmene Corp., the world's largest magazine paper maker, reported a fourfold increase in third-quarter net profit to euro178 million ($245 million) as paper demand and prices increased.

Revenue from July to September grew 21 percent to euro2.3 billion, the Finnish company said Thursday. Net profit in the same period in 2009 was euro40 million.

CEO Jussi Pesonen said "delivery volumes and sales prices increased in all businesses" and that in the current period they were expected to be unchanged from the third quarter.

The company gave a mixed outlook for the rest of the year.

"We repeat our guidance for the full year 2010 and expect the operating profit for the second half of the year to be higher than for the first half," Pesonen said.

But it warned of signs of "a slower momentum of recovery in Europe and a subdued economic growth in the U.S. ... which are expected to limit continuation of demand rebound and recovery in investment activities."

The company said that paper demand increased in all of its main markets, including of publication papers, and that it increased average paper prices by 4 percent compared with last year.

"However, the paper business made an operating loss due to significantly higher fiber costs than last year," UPM said. "The company aims to increase prices in all new contracts to compensate already materialized increases in main material costs."

UPM stock fell 3 percent to euro12.49 ($17.24) in early afternoon trading in Helsinki.

Forest product companies were by the global downturn, forced to cut production, close mills and lay off thousands of workers in the past few years with overcapacity forcing prices to plunge.

On Wednesday Finnish-Swedish paper maker Stora Enso Oyj reported that it swung into a third-quarter net profit of euro194 million ($270 million) from a loss of euro520 million a year earlier, but cautioned that costs and a weakness in seasonal demand would hit fourth-quarter earnings.

Helsinki-based UPM-Kymmene, one of Europe's largest forest products companies, has 64 plants in 14 countries with 170 sales and distribution companies worldwide. It employs 23,000 people worldwide.