HELSINKI A cautious outlook and dividend disappointment knocked shares in Finnish pulp and paper maker UPM-Kymmene on Tuesday, regardless of it notching up file earnings for 2016.
UPM has up to now protected its profitability with value cuts in addition to its give attention to pulp, a product with a brighter outlook than paper. Pulp can also be used to make tissue and packaging board, that are seeing rising demand, notably from China.
For this 12 months, UPM stated it anticipated profitability to “remain on a good level”, which traders took as an indication of a halt in earnings progress and hit the corporate’s shares.
The inventory had dropped 9.eight p.c by 0857 GMT, making it the largest faller within the STOXX 600 index.
“2016 was an excellent year for them. But it will be a difficult task to improve profitability from here, with the current business portfolio,” stated Inderes analyst Antti Viljakainen, with a “reduce” ranking on the inventory.
In an indication of the shift in its enterprise, throughout the fourth quarter UPM expanded its pulp manufacturing capability in Finland, whereas saying plans to shut paper capability in Germany and Austria.
UPM is the world’s largest maker of graphic papers reminiscent of newsprint and journal paper, the place demand is falling within the West because of a shift from print to digital publishing.
The firm stated its fourth-quarter adjusted working revenue rose 15 p.c from a 12 months in the past to 283 million euros ($303 million), barely forward of analysts’ common forecast of 275 million euros in a Reuters ballot.
UPM additionally proposed an annual dividend of 0.95 euros, up from 0.75 euros a 12 months earlier however under 1.05 euros within the ballot. The firm had not too long ago stated it was contemplating a particular dividend.
The firm additionally lifted its long-term profitability targets for many of its enterprise areas, saying it was wanting into alternatives to “develop business and product mix and further improve cost competitiveness”, however gave no additional particulars.
(Editing by Alexander Smith)