Finland's UPM lags profit forecast due to high maintenance costs
Adds share move in paragraph 1, analyst comment in paragraph 4, context and peers in paragraphs 9 and 10
July 23 (Reuters) -Finland's UPM-Kymmene UPM.HE posted a smaller than expected rise in its second-quarter operating profit on Tuesday, hit by high costs of maintenance work, sending its shares 4% lower.
UPM's quarterly adjusted operating profit rose 60% from a weak year-ago period to 182 million euros ($198 million), but missed a 212 million euro forecast in an LSEG poll of analysts.
It said the earnings were hit by "an exceptional amount" of maintenance at pulp mills and nuclear power plant units during the quarter.
J.P.Morgan said in a note to clients that profits in all major UPM units except for Fibre, which produces pulp, missed its estimates.
High wood expenses, low pulp prices and customer destocking have affected the Nordic forestry industry in recent years, with the impact carrying over into early 2024.
However, pulp prices have risen around 20% since the start of the year, and UPM said in April that destocking among customers had ended.
UPM reiterated that it expects its operating profit to improve in the second half of 2024.
"This improvement is expected to come especially from UPM Fibres, with the full pulp capacity available and pulp price levels starting at a higher level than at the start of the year," it said in a statement.
But UPM's peer Stora Enso STERV.HE, which will report second-quarter results on Wednesday, has warned that market uncertainty could lead to continued challenges for the industry.
Finland's Kemira, which provides chemical materials to forestry firms, last week reported declining prices in its Pulp & Paper business, affecting its second quarter revenue.
($1 = 0.9192 euros)
Reporting by Boleslaw Lasocki in Gdansk; editing by Milla Nissi
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