UPM improved its second-quarter earnings as market conditions strengthened in several businesses, with higher delivery volumes, margin management and efficiency measures supporting profitability in an inflationary operating environment. Comparable EBIT from continuing operations increased 71% year over year to Euro 212 million, while all business areas reported better results than a year earlier. Pulp deliveries increased to 1.32 million tonnes from 1.19 million tonnes, and electricity deliveries rose to 2,628 GWh from 2,409 GWh, according to UPM.
The company said market conditions differed across its portfolio. Demand remained strong for advanced renewable fuels, supported by healthy bio-premiums and higher fossil fuel reference prices. Markets for adhesive materials and specialty materials also showed solid growth in Europe and Asia, while the pulp business in Uruguay improved efficiency and offset higher logistics and other costs as pulp prices increased moderately. At the Leuna biochemicals refinery, industrial sugar deliveries reached substantial volumes, while deliveries of renewable functional fillers and other lignin derivatives are expected to begin during the third quarter.
Market conditions remained more difficult in Finland's pulp operations. Although pulpwood prices declined, profitability stayed low and maintenance work at the Pietarsaari mill reduced second-quarter earnings. UPM plans temporary production shutdowns at the Kaukas pulp mill and potentially the Pietarsaari pulp mill to optimize production, wood sourcing and profitability.
Chemical pulp prices continued to rise during the second quarter. In Europe, average prices for northern bleached softwood kraft pulp increased 6% from the first quarter, while bleached hardwood kraft pulp prices rose 15%. In China, softwood pulp prices increased 4%, while hardwood pulp prices declined 4%. Demand for sawn timber remained relatively weak because of the slow recovery in the construction sector.
Demand also varied across paper businesses. Specialty paper deliveries increased to 367 thousand tonnes from 343 thousand tonnes in the second quarter as demand in Asia remained good and European label paper markets benefited from customer stocking. In contrast, communication paper deliveries declined to 700 thousand tonnes from 740 thousand tonnes as European graphic paper demand fell 3% from a year earlier. Publication paper prices in Europe were 2% lower than a year earlier but improved from the first quarter. UPM said its communication papers business maintained broadly stable performance with slightly better margins while preparations continued for the planned graphic paper joint venture with Sappi.
Electricity markets were mixed during the quarter. The average Finnish spot electricity price was 76% higher than a year earlier but 47% lower than in the first quarter because of seasonal factors. UPM Energy benefited from higher sales prices and increased nuclear generation compared with the previous year, although hydropower production was reduced by dry conditions.
For the second half of 2026, UPM expects performance to benefit from moderately higher sales prices compared with the first half, while variable costs are expected to increase moderately. Maintenance activity and the production ramp-up at the Leuna biochemicals refinery are expected to increase costs, while energy refunds are expected to support the communication papers business in the fourth quarter. The company expects comparable EBIT from continuing operations in the second half to be approximately Euro 375 million to Euro 575 million.
UPM said significant uncertainties remain in geopolitics and global trade. The company said higher fossil fuel prices could increase energy, logistics and raw material costs, while trade tensions and tariffs could affect demand, pricing, supply chains and trade flows across its markets. It also said currency fluctuations and continued uncertainty in global logistics remain near-term risks for its operations.