UPM Annual Report 2019
2.2 Sales
Items affecting comparability
Sales by business area
Certain non-operational or non-cash valuation transactions with significant income statement impact are considered as items affecting comparability and reported separately to reflect the underlying business performance and to enhance comparability from period to period. In 2019, items affecting comparability in operating profit include EUR 15 million restructuring charges and EUR 12 million impairment charges related to closure of paper machine 2 at UPM Rauma mill, Finland, and EUR 24 million restructuring charges and EUR 1 million impairment charges related to closure of paper machine 10 at UPM Plattling mill, Germany. Additionally, restructuring charges reported as items affecting comparability include prior capacity closures in UPM Communication Papers as well as restructuring costs related to establishment of a new Business Services Hub in Wroclaw, Poland. In 2018, items affecting comparability in operating profit include fair value change of forest assets in Finland amounting to EUR 345 million, resulting mainly from higher forest growth estimates. In addition, the group has adjusted its long-term wood price estimates slightly. Capital gains affecting the comparability comprise of a gain of EUR 30 million relating to sale of UPM Communication Papers’ hydropower facilities in Schongau and Ettringen, Germany. Restructuring charges reported as items affecting comparability include reversals of previous years’ restructuring provisions, amounting to EUR 18 million for UPM Communication Papers and EUR 9 million charges in UPM Energy regarding restructuring of ownership in MeriPori power plant.
UPM generates revenue mainly from the sale of goods, i.e. several types of products. The majority of UPM’s revenue comes from sales of graphic and specialty papers to publishers, retailers, printing houses, merchants and distributors, converters and label stock manufacturers; sales of self-adhesive label materials to label printers and brand owners and sales of pulp products to tissue, board, specialty and graphic paper producers. The revenue comprises also sales of energy, biofuels, sawn timber and plywood products and a very limited amount of services not related to sale of goods. UPM sells a proportion of its products to several major customers. The largest customer in terms of sales represented approximately 3% of UPM’s sales in 2019 and 2018, and the ten largest customers represented approximately 15% of such sales. The group disaggregates its external sales by business area, because this depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Sales by UPM business areas are reported consistently with the internal reporting provided to UPM’s President and CEO who is responsible for allocating resources and assessing performance of the business areas. The goods and services included in sales revenue of each business area are presented in below tables.
EURm
2019
2018
EURm
2019 2,712
2018 CHANGE
UPM Biorefining UPM Energy UPM Raflatac
In operating profit Impairment charges Restructuring charges
2,892
-6 %
-13 -52
—
417
391
7 % 5 %
9
1,555 1,412 4,552
1,488 1,429 4,690
Change in fair value of unrealised cash flow and commodity hedges Capital gains and losses on sale of non-current assets Fair value changes of forest assets resulting from changes in estimates
UPM Specialty Papers
-1 % -3 % -6 %
5
—
UPM Communication Papers
UPM Plywood Other operations
450 264
480 326
— 29
-19 %
Eliminations
-1,125
-1,214
–
— 345
Total
10,238 10,483
-2 %
-60 -60
382 382
Total
Total in profit before tax
In income taxes Taxes related to items affecting comparability
14 14
-80 -80 302
Total
-46
Total in profit for the period
» Refer Note 2.1 Business areas for information on UPM products.
Sales by destination
External sales by major products
BUSINESS AREA EUR million UPM Biorefining UPM Energy UPM Raflatac
BUSINESS
2019
2018
UPM Pulp, UPM Biofuels, UPM Timber
2,096
2,223
62%
UPM Energy UPM Raflatac
180
109
13%
19%
1,555 1,203 4,516
1,488 1,213 4,664
UPM Specialty Papers
UPM Specialty Papers
UPM Communication Papers
UPM Communication Papers
UPM Plywood Other operations
UPM Plywood
427 258
458 321
2%
UPM Forest, UPM Biochemicals, UPM Biomedicals, UPM Biocomposites
Eliminations and reconciliations
4
7
2%
10,238
10,483
Total
2%
BUSINESS UPM Pulp
PRODUCT RANGE
Softwood, birch and eucalyptus pulp
UPM Biofuels UPM Timber UPM Energy UPM Raflatac
Wood-based renewable diesel for transport and renewable naphtha for transport and petrochemicals
Standard and special sawn timber Electricity and related services Self-adhesive paper and film label stock
Sales by country
Total assets and capital expenditure by country
UPM Specialty Papers
Labelling materials, release base papers, flexible packaging materials, office papers, graphic papers
UPM Communication Papers
Graphic papers for various end uses
Assets
Capital expenditure
UPM Plywood
Plywood and veneer products
EURm
2019
2018
EURm
2019
2018
2019
2018
UPM Forest
Wood and wood-based biomass (logs, pulpwood, chips, forest residues etc.), full forestry service offering
Finland
894
916
Finland
9,217 8,900
135
131
UPM Biochemicals UPM Biomiedicals UPM Biocomposites
Lignin products for industrial use
Germany
1,580 1,213
1,688 1,158
Germany
1,144
987 406 152 784
94
59
Wood-based products for biomedical applications UPM ProFi decking products and UPM Formi granules
United States
United States
385 155 782
6 5
3 5
United Kingdom
665
664
United Kingdom
China France
1,042
1,186
China France
35
34
387
395
67
59
1
1
Uruguay
25
57
Uruguay
2,099 1,820
70
17
Other EU countries
2,372
2,380
Other EU countries
341 185 348
333 150 406
8
9
Other European countries
476
461
Other European countries
24
40
Rest of world
1,584
1,577
Rest of world
1
5
14,722 13,996
378
303
10,238 10,483
Total
Total
158
159
UPM ANNUAL REPORT 2019
UPM ANNUAL REPORT 2019
CONTENTS
ACCOUNTS
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
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