Helsinki - AFP
Finnish forest products giant UPM-Kymmene reported a quarterly profit leap on Wednesday but its shares slumped on weak operating profit before special items. The group reported a 75-percent increase in second-quarter net profit to 295 million euros from 169 million euros for the same period a year ago and far exceeding analyst forecasts, polled by Dow Jones Newswire, of 233.7 million euros. However, operating profit excluding special items was 201 million euros ($288 million), higher than 199 million euros for the same period last year, but short of the 223 million expected by analysts polled by Dow Jones Newswires. The figues sent UPM\'s share price sliding 7.6 percent to 9.16 euros with the Helsinki Stock Exchange down only 2.56 percent around mid-day. UPM chief executive Jussi Pesonen said he was pleased that the company had maintained operating profit at a steady level on a 12-month basis despite \"challenging\" cost pressures. \"In the second quarter, we managed to maintain the quarterly operating profit on a steady level and ... we were able to offset the rise in variable costs through higher sales prices,\" chief executive Jussi Pesonen said in a statement. Sales rose 9.3 percent to 2.4 billion euros, in line with analyst expectations. Wednesday\'s results come after the company doubled its first-quarter profits after tripling 2010 earnings as it took advantage of the global economic recovery. UPM\'s outlook for the rest of the year remained unchanged, with operating profit for the second half of 2011 expected to be on the same level as last year, but improving for the whole year compared to 2010. On Tuesday, UPM finalised a deal to acquire Finnish paper maker Myllykoski in a move that is expected to bring a 40-million euro windfall in the third quarter and improve flagging paper prices in the long term. \"The new combination offers us excellent opportunities to improve our cost competitiveness, also to the benefit of our customers,\" Pesonen said. UPM is expected to announce in mid-September exactly how it plans to slash overcapacity to improve pricing as a result of the acquisition.