Finland's UPM-Kymmene, the world's biggest producer of graphic papers such as newsprint, magazine and office paper, reported on Tuesday a jump in quarterly profit on the back of cost cuts, lifting expectations for future dividends.
Shares in the company leapt as much as 9.5 percent after it said first-quarter core operating profit rose 34 percent from a year ago to 281 million euros ($317 million), well above analysts' average forecast of 233 million in a Reuters poll.
"We achieved a good level of operational efficiency, we were able to lower our costs significantly and the market environment was mostly favourable," chief executive Jussi Pesonen said in a statement.
UPM has recently been shifting focus to pulp as the market for print paper in Europe has been hit by growth in digital media.
The pulp unit's core operating profit rose to 135 million euros from 97 million a year earlier on the back of investments. Pulp is needed not only in making paper but also in tissue products and packaging board.
"Cash flow from the first quarter was very strong, and as the company's investment needs are rather small for this year, this will support UPM's ability to pay dividends," said OP Bank analyst Henri Parkkinen.
UPM's results also lifted shares in its main rival Stora Enso by 5 percent.
Source : reuters.com