Original Source: FD (FAIR DISCLOSURE) WIRE
JUSSI PESONEN, PRESIDENT & CHIEF EXECUTIVE OFFICER, UPM-KYMMENE CORPORATION: Well, ladies and gentlemen, nice to see you all here, and especially, those who have been coming from the holidays. I can guarantee that by any measures this quarter has been busy as you can guess.
The most delightful reason for it has been the delivery development during the second quarter. Paper deliveries have been on the high level and it has been 7% up from the last year. But UPM's profitability in main businesses remained weak. Thus, UPM is to increase paper prices on autumn.
My presentation will cover five key business drivers, financial for the quarter -- second quarter 2004, current events and near-term outlook. When speaking about business drivers, we often mean, end use indicators like advertising expenditure, supply demand balance, and production costs and raw material prices.
And first, we will look at the deliveries. Fine and specialty papers were facing third consecutive year of nice growth figures, and even the last one -- last half year figure being 9%.
In newsprint, where we saw actually quite a dramatic drop during 2002 first half of the year, has really nicely recovered now during the last two years. Magazine papers where we didn't even see the big drop, that's really performed quite nicely at the last year - last year's -- comparing to last year the growth has been 6%.
All in all, this first half as we delivered 360,000 tons more paper than last year. Where that delivery growth has been then coming? And let's look first - look at first the business drivers, and especially, the relation to advertising revenues and advertising. This graph shows that, where? What type of end users?
And what kind of products are used for those end users? First of all, it is quite clear that in newsprint area and in newsprint section, the most of the newsprint is used for newspapers.
So in newspaper business on publishing, advertising expenditure of newspapers is very important driver for delivery development.
It is as well in uncoated free sheet very clear that forms, manuals, envelopes and cut sizes representing more than 60% of the end use, and therefore, that is a main driver for delivery development in uncoated free sheet. But when looking at the magazine type of products, about half of the magazine uncoated free sheet end use is related to commercial printing. We call it here direct mail, but it's including catalogs, direct mail, , inserts, flyers, brochures and other mainly advertising material. So that is very relevant for the development of deliveries and demand.
If we then look at what has then happened during the last three years in different advertising development, our expenditure in print media. We can …