July 23, 2020 / 8:20 AM / 15 days ago

UPDATE 2-Labels ease virus pain for forestry firm UPM

* Q2 core earnings 320 mln euros vs forecast 295 mln

* Sees significant fall in full-year operating profit

* Shares up 1.6% (Adds shares, details, Stora)

By Tarmo Virki

July 23 (Reuters) - Quarterly profits at Finnish forestry products maker UPM fell less than expected as a surge in demand for labels for online shopping and packaged goods partly offset the hit from coronavirus lockdowns in other areas, such as office paper.

UPM said on Thursday its earnings before interest, tax, depreciation and amortisation for April-June fell to 320 million euros ($371 million) from 466 million a year earlier, beating the 295 million expected by analysts in a Refinitiv Eikon poll.

“Demand for graphic papers seriously suffered as a result of lockdowns, whereas labels and speciality papers saw strong demand and delivered excellent results,” Chief Executive Jussi Pesonen said in a statement.

UPM said it saw demand growing for self-adhesive labels during lockdowns as consumers spent more on packaged goods.

Shares in UPM were 1.6% higher in morning trading.

UPM said the lockdowns and economic downturn triggered by the pandemic had led to a high level of uncertainty for the second half, and forecast full-year comparable operating profit would fall significantly from 1.4 billion euros in 2019.

“The lockdown of businesses, offices and schools caused a drastic decline in printed advertising and use of office papers,” Pesonen said.

The comments echoed those of rival Stora Enso, which earlier this week said volumes at all units but packaging delivery dropped as the pandemic hit demand.

Europe’s two largest paper makers, UPM and Stora, both reported their paper units falling to operating losses in the quarter as the pandemic placed extra pressure on prices and deliveries.

$1 = 0.8634 euros Reporting by Tarmo Virki in Tallinn; Editing by Alex Richardson and Mark Potter

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