UPM plans more savings after cost cuts boost Q3 profit

By Jussi Rosendahl
HELSINKI, Oct 28 (Reuters) - Finnish pulp and paper maker UPM-Kymmene posted a bigger-than-expected rise in quarterly core profit on the back of cost cuts, and said it was planning more savings to boost profitability amid a weak European economy.

The world's biggest producer of graphic papers, such as magazine paper and newsprint, said on Tuesday its total third-quarter core operating profit rose to 235 million euros ($299 million), or 9.7 percent of sales, from 194 million, or 7.8 percent of sales, in the same period last year. The result topped all forecasts in a Reuters poll of analysts which had an average of 175 million euros.

Shares in the company jumped 7 percent to 11.55 euros by 0802 GMT.

UPM chief executive Jussi Pesonen said the company reached its latest 200 million euro savings target ahead of schedule, adding the result provided the foundation for rising dividends.

However, there was room for more improvement, he said.

"We are preparing a new plan including fixed and variable cost savings. We are analysing the means and tools at our disposal and will communicate a new profit improvement target in the next few weeks," Pesonen said in a statement.

UPM, along with its main rival Stora Enso, has been closing paper mills amid a decline in European paper demand as consumers shift from printed media to digital devices.

It said its fourth-quarter performance would be hampered by seasonally higher fixed costs, year-end stoppages in paper mills as well as a maintenance shutdown of its pulp mill in Uruguay.

DAILY MAIL -  ENGLAND - 28 octubre 2014