Finnish paper mill company UPM has lowered its outlook for the fiscal year 2023 (FY23) due to a rapid decline in pulp and chemical prices.

Another major reason for this move was the slower recovery of deliveries in most of its businesses, the company said.

The previously announced FY23 outlook forecasted that the company’s comparable earnings before interest and taxes (EBIT) will increase in the first half (H1) of FY23 from H1 2022, making 2023 “a year of strong financial growth.”

Now after lowering its FY23 outlook, UPM is expecting its comparable EBIT in the H1 of FY23 to decrease from that of last year’s H1.

In 2022, the company registered a comparable EBIT of €664m ($722.96) in the H1 FY22, representing a growth of 13% from €586m in H1 FY21.

In addition, UPM is also anticipating a decline in the comparable EBIT for the full-year FY23, in comparison to FY22.

UPM’s latest guidance claimed that destocking in several product value chains has been a major reason for continuous delays in the delivery volumes in most businesses.

The price of pulp and chemicals has also seen a rapid fall and is quickly moving towards bottom-of-the-cycle price levels.

UPM has indicated that it has high-maintenance activity planned during the second quarter (Q2) of the current year.

In FY23, the opening of UPM Paso de los Toros pulp mill and the OL3 nuclear power plant may contribute to the increase in their overall delivery volumes.    

The new pulp mill in Paso de los Toros, Uruguay started operating in April this year.

The company said it is currently focusing on margin-management in the short-term lack of volumes.