Will UPM (HLSE:UPM) Restructuring Efforts Shift Its Long-Term Competitive Position in Paper Markets?

• In late July 2025, UPM-Kymmene Oyj completed employee consultations and confirmed the permanent closure of paper production at its Kaukas mill, with the transition of coated mechanical paper output to the Rauma facility and a personnel reduction of 220, while maintaining its other key operations at Kaukas.
• This move reflects ongoing restructuring within UPM’s business in response to declining paper demand and persistent cost pressures in the Finnish wood market.
• We’ll examine how UPM’s decisive closure of the Kaukas paper machine factors into its forward-looking investment narrative.

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UPM-Kymmene Oyj Investment Narrative Recap

To invest in UPM-Kymmene Oyj today, you need confidence in management’s ability to reshape the business for earnings stability amid the shift from legacy paper to higher-margin renewables and speciality materials. The Kaukas mill closure underscores UPM’s response to shrinking paper demand, but this does not significantly affect the company’s main short-term catalyst, the ramp-up of new biorefinery operations. The biggest immediate risk remains persistently high wood costs in Finland, which continue to pressure margins and future earnings.

In the context of cost pressures, UPM’s new partnership with Versowood is especially relevant, as it enhances security of wood supply and supports the company’s pulp and biofuels operations. This supply chain move aligns with UPM’s focus on fortifying its most profitable segments, even as its cost structure remains under scrutiny. Yet, even with these efforts, investors should be aware that...

Read the full narrative on UPM-Kymmene Oyj (it's free!)

UPM-Kymmene Oyj's outlook anticipates €11.2 billion in revenue and €1.3 billion in earnings by 2028. This scenario assumes a 3.0% annual revenue growth rate and an earnings increase of approximately €955 million from current earnings of €345 million.

Uncover how UPM-Kymmene Oyj's forecasts yield a €27.13 fair value, a 22% upside to its current price.

Exploring Other Perspectives

Five fair value estimates from the Simply Wall St Community range from €8.52 to €48.33, demonstrating wide differences in outlook. Many see long-term opportunities in renewables, but ongoing high Finnish wood costs could be a key factor shaping UPM’s results, consider reviewing alternate views before making up your mind.

Explore 5 other fair value estimates on UPM-Kymmene Oyj - why the stock might be worth over 2x more than the current price!

Build Your Own UPM-Kymmene Oyj Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your UPM-Kymmene Oyj research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free UPM-Kymmene Oyj research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate UPM-Kymmene Oyj's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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