UPM-Kymmene Oyj (UPM) Earnings Call Transcript & Summary

[Foreign Language] We will start the meeting by listening to greetings from the Chairman of the Board of Directors, Bjorn Wahlroos.

Welcome to UPM-Kymmene's virtual AGM. Sadly, it's virtual. We would, of course, very much rather have seen you all in person. But on the other hand, the virtuality gives us the opportunity to communicate with a somewhat broader audience in a somewhat different way. We meet for our Annual General Meeting under circumstances that are a bit complicated. But on the other hand, we meet under circumstances with a bit more clarity, I think, than we had a year ago. It is now clear that at least where the businesses of UPM-Kymmene are concerned, the implications of the pandemic have not, at least not in financial terms, been as dramatic as I think we feared a year ago. Partly it's, of course, due to the fact that the pandemic has turned out to be somewhat different than we feared. And on the other hand, and here, I would like to express a very, very warm thank you to the whole organization of UPM-Kymmene, the company, its managers and its people have been able to adapt in an admirable way. What that means is that while we're not reporting on a record result for 2020, we're still producing a decent result, good even. And when I look towards the future, I think it looks very, very promising indeed. We are now actually at something of a top of an investment cycle. This used to be something which one wasn't really meant to tell once shareholder in the old pulp and paper industry a quarter of a century ago because the moment, you mentioned the word investments, people with good reason on the investor side became very concerned that once again, the management of the companies were running wild, investing their money left and right. As I'm sure you know, this is no longer the case. UPM-Kymmene has been investing all along. We have upgraded our 3 pulp mills in Finland, 2 fantastic status to global competitiveness, and we have maintained that competitiveness in our Fray Bentos pulp mill in Uruguay. While we have had to backtrack in paper to maintain the balance of supply and demand in the European market, primarily for printing papers, we have also made a number of smaller investments. And particularly at the moment, we are completely upgrading or actually building a new power unit in our Nordland Papier plant in Dörpen, in Germany. But the 2 most important investments underway, of course, is the world's largest pulp mill, well underway, being constructed at Paso de los Toros in Uruguay. It will be a 2-plus million tonne pulp mill, something the world has never seen before. And I'm very glad to report, as I'm sure Mr. Pesonen will do in greater detail, that it is on time. We admit to the fact that the railroad project probably will be running a bit behind schedule, but that doesn't really mean that there will be any problems with opening up the plant. Therefore, it's fascinating to see such a giant venture being on time in these very trying times, with the pandemic and everything else affecting global commerce. It seems to us that the opening up of that plant, which we hope will occur, as I said on schedule, will probably fit the pulp market rather well. We are seeing strengthening pulp prices, actually quite forcefully strengthening. And as a consequence, it now seems to us that, that investment proposal, and indeed, its realization at Paso de los Toros is a really timely one and we have great hopes for the future. In a way, an even more interesting -- primarily because it's a completely new area for UPM-Kymmene, is the plant we're building in Leuna in Eastern Germany. We will be entering a very interesting new chemicals market where the thing that binds it to our root, really, is the raw material, we will be working with lumber, with biological fibers, as we do in most all of our businesses. Again, Jussi will, I'm sure, provide more on this investment, but it is fascinating to us on the Board to see how we are moving in a new direction, determined by the trends that we can see in our environment, the most important trends away from petrochemical molecules, away from carbon that's been dug out of the earth into recyclable carbon molecules where the raw material is growing either in woods or on fields. All this contains wonderful challenges and wonderful growth opportunities for UPM-Kymmene. If you add to that, that we have very sizable businesses, of course, most obviously, our pulp business, but also our Specialty Papers business, which, to a large extent, produces release liner for the industry that is using them as back papers for labels, and then, of course, our label stock division, all of which are an important part of the global growth in e-commerce. I think the challenges could not be more exciting going forward. So it is with some enthusiasm and a great degree of confidence that we're looking at the future at this AGM. The company is in really good shape, and that is something I really want to thank all of its people, its managers and also personally, it's CEO for. You've all done a great job under difficult circumstances, and we're seeing a road forward, which is clear in the case of UPM-Kymmene than it is in many, many other industries. We are in the midst of reshaping a traditional industry that used to be thought of as an industry of the past because it produced a medium which -- the demand for which is stably decreasing, namely paper. We are converting it into an industry, which is one of the key industries of the future, an industry that uses recyclable, biological molecules to create almost anything. It is, therefore, very -- a very wonderful moment really to bid you all welcome to the AGM and express on the behalf of the Board and the whole company our thankfulness and our, should I say, a very warmest thanks for contributing by voting and by watching the presentations of this AGM. As I said in the early part of the message, I would dearly have liked to meet you all face-to-face in the traditional manner, alas, there is no opportunity for that. The main thing, of course, is that the company is running well. The main thing is that the voice of its owners is being heard and that its Board and management conduct their jobs, they rise to the challenges ahead in a way which produces shareholder value. With that, I think it's a great moment to wish you all a great experiencing -- listening to the presentations of the AGM. And once more say, welcome to the AGM, although you're not really here except in a virtual sense, just like myself. So welcome.

[Foreign Language] The meeting has been opened now. And we move on to Item #2. [Foreign Language] We will call the meeting to order. [Foreign Language] I will handover to guide you through the meeting with comments as -- in English as well. [Foreign Language] So Saara-Maria Helminen is called to act as the Secretary of the meeting. Due to the COVID-19 pandemic, the Annual General Meeting will be held as a remote meeting based on the temporary legislative act. It's not possible to attend the meeting in person and the members of the Board of Directors as well as the Board candidates, the President and CEO and the company auditor will, therefore, not be present at the meeting. The formalities regarding the order of the meeting are set forth in the notice and applicable laws and the formalities will be recorded in the meeting minutes, which will be available on the company's website latest on the 13th of April this year. Due to the exceptional nature of the meeting, all formalities recorded in the meeting minutes will not be read out loud. We thank you very much for your cooperation and understanding in making this meeting possible despite these extraordinary circumstances. [Foreign Language] Election of person to scrutinize the minutes and to supervise the counting of votes. [Foreign Language] Henri Keltamäki will scrutinize the minutes and supervise the counting of votes. [Foreign Language] We'll record the legality of the meeting. [Foreign Language] We note in the meeting -- in the minutes that the Annual General Meeting has been legally summoned and constitutes a quorum. [Foreign Language] We'll record the attendance at the meeting and adoption of the list of votes. [Foreign Language] As you can see, around 54.2% of all the shares and votes of the company are represented at this meeting. [Foreign Language] We can note that company has not been informed about technical or other issues related to the advance voting or adoption of the list of votes. The shareholders' rights to attend the meeting and the validity of the counting of votes have therefore been reliably ascertained. As stated and we can note that the votes given in advance from required majority for each matter on the agenda to support the proposals given by the Board of Directors and its committees. And I will -- and we will separately inform you about the voting results in each item on the agenda. The list of votes is hereby confirmed. [Foreign Language] The financial statements, report of the Board of Directors and the auditor's report for the year 2020 will now be presented. [Foreign Language] President and CEO, Jussi Pesonen, will now make his presentation.

[Foreign Language] Dear shareholders... [Foreign Language]

[Foreign Language] We will now move to the auditor's report. [Foreign Language] First part of the opinion. [Foreign Language] We note in the minutes that the financial statements, annual report and auditor's report have been presented to the Annual General Meeting. [Foreign Language] Adoption the financial statements. [Foreign Language] Financial statements have been adopted. [Foreign Language] Resolution on the use of profit shown on the balance sheet and the payment of dividend. [Foreign Language] Here, we can see the proposal. [Foreign Language] Proposal regarding dividend has been approved and adopted. [Foreign Language] Resolution of discharge of the members of the Board of Directors and the President and CEO from liability. [Foreign Language] We note that the persons mentioned have been discharged from liability. [Foreign Language] Adoption of the remuneration report. [Foreign Language] We note on the basis of the advance voting that the AGM has adopted a remuneration report for 2020. [Foreign Language] Resolution on remuneration of the members of the Board of Directors. [Foreign Language] You can see the proposal as a summary. [Foreign Language] We will note on the basis of the votes given that the proposal has been approved. [Foreign Language] Resolution on the number of members of the Board of Directors. [Foreign Language] Nine members have been proposed. [Foreign Language] So this proposal has been approved and adopted. [Foreign Language] Election of 9 members of the Board of Directors. [Foreign Language] Let's take a look at the video introduction of Director nominees. [Presentation]

[Foreign Language] Also a new director nominee. [Foreign Language] On the basis of the votes already given in advance, we can note that the proposal to the new composition of the Board of Directors has been approved. [Foreign Language] Resolution on the remuneration of the auditor. [Foreign Language] Here, you can see the proposal. [Foreign Language] The proposal has been adopted. [Foreign Language] We are about to elect the auditor. [Foreign Language] Here, we can see the proposal. [Foreign Language] Also, this proposal has been adopted. [Foreign Language] Authorizing the Board of Directors to decide on the issuance of shares and special rights entitling to shares. [Foreign Language] Here is the summary of the proposal. [Foreign Language] This proposal has been approved and adopted. [Foreign Language] Authorizing the Board of Directors to decide on the repurchase of the company's own shares. [Foreign Language] Here, you can see the summary of the proposal. [Foreign Language] We note in the minutes that the proposal has been approved and adopted. [Foreign Language] The last item on the agenda: authorizing and Board of Directors to decide on charitable contributions. [Foreign Language] You can see how the previous authorization has been used. [Foreign Language] Summary of the proposal. [Foreign Language] We can note in the minutes that this proposal has been approved and adopted. [Foreign Language] Since all matters on the agenda have been handled by the meeting, I can conclude the meeting and thank the shareholders and the viewers, and wish you all the best and a safe, happy Easter. The Annual General Meeting is closed. Thank you.